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What changed in KORN FERRY's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of KORN FERRY's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+513 added−373 removedSource: 10-K (2023-06-28) vs 10-K (2022-06-28)

Top changes in KORN FERRY's 2023 10-K

513 paragraphs added · 373 removed · 304 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+45 added−34 removed14 unchanged
Biggest changeSome highlights from fiscal 2022 include global industry awards and accolades in recognition of performance and achievements: • Recognized by Seramount (formerly Working Mother Media) as the No. 1 company for female hires and promotions and one of the 100 Best Companies for Parents 2021 • Best Places to Work for LGBTQ Equality from the Human Rights Campaign in 2021 • Leader in 2022 Gartner Magic Quadrant for Sales Training Providers • Pacesetter in ALM Intelligence’s Workforce Management Services Research Report for 2021 • Pacesetter in ALM Intelligence’s Employee Well-being Research Report for 2022 • Leader & Star Performer in Recruitment Process Outsourcing, 2021 Everest Group • Listed in INC.’s Best-Led companies of 2021 in America Our Go-To-Market Approach Our go-to-market strategy brings together Korn Ferry’s core solutions to drive more integrated, scalable client relationships.
Biggest changeSome highlights from fiscal 2023 include global industry awards and accolades in recognition of performance and achievements: • Named America's Number One Executive Recruiter Firm 2023, Forbes • Named among the top 20 on Training Industries’ 2023 Top Sales Training & Enablement Companies • Named in America's Best Management Consulting Firms list in 2023, Forbes • Leader level Carbon Disclosure Project ("CDP") Rating for 2022 response to climate change questionnaire • Gold Medal for Sustainability rating from EcoVadis 2022 • Gold HIRE Vets Medallion Award 2022, US Department of Labor • Recognized by Seramount (formerly Working Mother Media) in the best Companies for Parents list 2022, in the Best Companies for Dads list 2022, and as a Top Company in the Executive Women list 2022 • Top Global RPO Provider, RPO Baker's Dozen List 2022, HRO Today • Recognized as a Leader in Recruitment Process Outsourcing in Everest Group's PEAK Matrix Assessment 2022 Our Go-To-Market Approach Our go-to-market strategy brings together Korn Ferry’s core solutions to drive more integrated, scalable client relationships.
Stockholders may request copies of these documents by writing to our Corporate Secretary at 1900 Avenue of the Stars, Suite 1500, Los Angeles, California 90067. 9 In addition, we make available on the Investor Relations portion of our website at http://ir.kornferry.com press releases and related earnings presentations and other essential information, which we encourage you to review.
Stockholders may request copies of these documents by writing to our Corporate Secretary at 1900 Avenue of the Stars, Suite 1500, Los Angeles, California 90067. In addition, we make available on the Investor Relations portion of our website at http://ir.kornferry.com press releases and related earnings presentations and other essential information, which we encourage you to review.
In response to the pandemic, we developed and implemented new practices designed to prioritize the health and safety of our employees and clients. Available Information We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission (the "SEC"), according to the Securities Exchange Act of 1934, as amended (the "Exchange Act").
In response to the pandemic, we developed and implemented new practices designed to prioritize the health and safety of our employees and clients. 9 Available Information We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission (the "SEC"), according to the Securities Exchange Act of 1934, as amended (the "Exchange Act").
We support our clients amid a time of enormous transition and change, with these specific business challenges: • Transforming businesses while delivering robust performance. • Solving leadership challenges arising from the new landscape of hybrid and remote working. • Delivering for people, planet, and profit, and assisting with ESG and other corporate strategic initiatives. • Finding the right talent in a dynamic and dislocated labor market. • Engaging and motivating employees so companies can retain and reward their talent. • Supporting the work-scape transition from a place of work to collaboration spaces. • Building work environments that are inclusive and free from bias.
We support our clients amid a time of enormous transition and change, with these specific business challenges: • Transforming businesses while delivering robust performance. • Solving leadership challenges arising from the new landscape of hybrid and remote working. • Delivering for people, planet, and profit, and assisting with ESG and other corporate strategic initiatives. 6 • Finding the right talent in a dynamic and dislocated labor market. • Engaging and motivating employees so companies can retain and reward their talent. • Supporting the work-scape transition from a place of work to collaboration spaces. • Building work environments that are inclusive and free from bias. • Engaging and Reward to retain top talent.
This allows us to give organizations an end-to-end view of talent. 3. Executive Search helps organizations recruit board-level, chief executive, and other senior executive and general management talent to deliver lasting impact. Our approach to placing talent brings together our research-based IP, proprietary assessments and behavioral interviewing with our practical experience to determine the ideal organizational fit.
This allows us to give organizations an end-to-end view of talent. 3. Executive Search helps organizations recruit board-level, chief executive, and other C-suite/senior executive and general management talent to deliver lasting impact. Our approach to placing talent brings together our research-based IP, proprietary assessments and behavioral interviewing with our practical experience to determine the ideal organizational fit.
Client Base —During fiscal 2022, the Digital segment partnered with over 8,300 clients across the globe, and 34% of Digital’s fiscal 2022 fee revenue was referred from Korn Ferry’s other lines of business, primarily Consulting. Our clients come from the private, public and not-for-profit sectors, across every major industry and represent diverse business challenges.
Client Base —During fiscal 2023, the Digital segment partnered with over 8,300 clients across the globe, and 34% of Digital’s fiscal 2023 fee revenue was referred from Korn Ferry’s other lines of business, primarily Consulting. Our clients come from the private, public and not-for-profit sectors, across every major industry and represent diverse business challenges.
Competition —Again, there is fragmentation in this sector. We compete with specialist suppliers, and boutique and large consulting companies in each solution area such as AON, Mercer, Willis Towers Watson, SHL, Fuel 50, SkillSoft, Criteria, Predictive Index, Prevue Hire and Textlio. One of our advantages is linking our data, IP, and our technology platform across our solutions.
Competition —Again, competition is fragmented in this sector. We compete with specialist suppliers, and boutique and large consulting companies in each solution area such as AON, Mercer, Willis Towers Watson, SHL, Fuel 50, SkillSoft, Criteria, Predictive Index, Prevue Hire and Textlio. One of our advantages is linking our data, IP and our technology platform across our solutions.
Consultants are organized in six broad industry groups and bring an in-depth understanding of the market conditions and strategic management issues clients face within their industries and geographies. In addition, we regularly look to expand our specialized expertise through internal development and strategic hiring in targeted growth areas.
Consultants are organized in six broad industry groups and bring an in-depth understanding of the market conditions and strategic management issues clients face within their industries and geographies. In addition, we regularly look to expand our specialized expertise through internal development and strategic hiring in targeted growth areas. Functional Expertise — We also have organized centers of functional expertise.
Our goal is to drive topline synergies by increasing growth in crossline business referrals. This has been successful as during fiscal 2022, approximately 70% of revenue came from clients using multiple lines of our business, consistent with fiscal 2021. We intend to continue evolving integrated solutions along industry lines to drive cross-geography and cross-solution referrals.
Our goal is to drive topline synergies by increasing growth in the crossline of business referrals. This has been successful as during fiscal 2023, approximately 80% of revenue came from clients using multiple lines of our business, consistent with fiscal 2022. We intend to continue evolving integrated solutions along industry lines to drive cross-geography and cross-solution referrals.
Client Advanced Analytics and Data Management to generate insights: We integrate and build upon our datasets and external data using advanced modeling and artificial intelligence. This allows us to produce predictive insights and deliver demonstrable client impact.
Client Advanced Analytics and Data Management to generate insights: We integrate and build upon our datasets and external data using advanced modeling and AI. This allows us to produce predictive insights and deliver demonstrable client impact.
Client Base —During fiscal 2022, the Consulting segment partnered with over 4,900 clients across the globe, and 28% of Consulting’s fiscal 2022 fee revenue was referred from Korn Ferry’s other lines of business. Our 3 clients come from the private, public , and not-for-profit sectors, across every major industry and represent diverse business challenges .
Client Base —During fiscal 2023, the Consulting segment partnered with over 4,800 clients across the globe, and 28% of Consulting’s fiscal 2023 fee revenue was referred from Korn Ferry’s other lines of business. Our clients come from the private, public, and not-for-profit sectors across every major industry and represent diverse business challenges.
Percentage of Fiscal 2022 Assignments Opened by Functional Expertise Board Level/CEO/CFO/Senior Executive and General Management 76 % Finance and Control 7 % Information Systems 6 % Marketing and Sales 4 % Manufacturing/Engineering/Research and Development/Technology 4 % Human Resources and Administration 3 % Client Base —Our more than 4,300 Executive Search engagement clients in fiscal 2022 include many of the world’s largest and most prestigious public and private companies .
Percentage of Fiscal 2023 Assignments Opened by Functional Expertise Board Level/CEO/CFO/Senior Executive and General Management 78 % Finance and Control 7 % Information Systems 4 % Marketing and Sales 4 % Manufacturing/Engineering/Research and Development/Technology 4 % Human Resources and Administration 3 % Client Base —Our more than 4,000 Executive Search engagement clients in fiscal 2023 include many of the world’s largest and most prestigious public and private companies .
During fiscal 2022, we partnered with almost 15,000 organizations. Our clients include the world’s largest and most prestigious public and private companies, middle-market and emerging growth companies, and government and non-profit organizations.
During fiscal 2023, we worked with almost 15,000 organizations. Our clients include the world’s largest and most prestigious public and private companies, middle-market and emerging growth companies, and government and non-profit organizations.
We are strategic, collaborating with clients to hire best-fit candidates using our assessment IP, proprietary technology and professional recruiters. Our Talent Delivery Centers provide our teams with increased scalability, multilingual capabilities, global reach and functional specialization.
We believe our competitive advantage is distinct. We are strategic, collaborating with clients to hire best-fit candidates using our assessment IP, proprietary technology and professional recruiters. Our Talent Delivery Centers provide our teams with increased scalability, multilingual capabilities, global reach and functional specialization.
We have built strong client loyalty, with nearly 90% of our engagements in fiscal 2022 completed on behalf of clients for whom we had conducted engagements in the previous three fiscal years.
We have built strong client loyalty, with nearly 80% of our engagements in fiscal 2023 completed on behalf of clients for whom we had conducted engagements in the previous three fiscal years.
We bring their strategies to life by designing their organizational structure and helping them hire, motivate and hold on to the best people. And we help professionals navigate and advance their career.
We seek to bring their strategies to life by designing their organizational structure and helping them hire, motivate and retain the best people. And we help professionals navigate and advance their career.
We run promotion cycles twice a year to allow us to appreciate the contribution of colleagues more frequently. In fiscal 2022, we promoted almost 2,000 people in our four lines of business and Corporate. We offer competitive benefits across the globe customized to each country we operate in based on market prevalence and cultural relevance.
We run promotion cycles twice a year to allow us to appreciate the contribution of colleagues more frequently. In fiscal 2023, we promoted over 1,200 people in our five lines of business and Corporate. We offer competitive benefits across the globe customized to each country we operate in based on market prevalence and cultural relevance.
Item 1. Business Company Overview Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our,” and “us”) is a global organizational consulting firm. Korn Ferry is a different firm today than when we were founded.
Item 1. Business Company Overview Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our,” and “us”) is a leading global organizational consulting firm.
Our progressive benefit offerings in the U.S. helped us earn top recognitions by Seramount (formerly Working Mother Media) as the No. 1 company for female hires and promotions in 2021, one of the 100 Best Companies for Parents 2021, and as one of the Human Rights Campaign’s Best Places to Work for LGBTQ Equality 2021.
Our progressive benefit offerings in the U.S. helped us earn top recognitions by Seramount (formerly Working Mother Media) as the best company for Parents 2022, Top Company for Dads 2022, Top Company for Female Professionals 2022, and as one of the Human Rights Campaign’s Best Places to Work for LGBTQ Equality 2022.
We also champion a range of career and leadership programs, such as our Mosaic program for diverse high-potentials, Leadership U for Korn Ferry, and Leadership U PLUS for Korn Ferry colleagues, an internal leadership development program.
We also champion a range of career and leadership programs, such as our Mosaic program for diverse high-potentials, Leadership U for Korn Ferry, and Leadership U PLUS for Korn Ferry colleagues, an internal leadership development program. We use our Korn Ferry Advance platform, used externally by clients for career coaching and career development, as an internal development program platform.
We strongly believe in a radically human approach, striving for empathy, honesty and authenticity across our interactions. Developing and Rewarding Our People We focus on making Korn Ferry a firm that energizes, develops, rewards and empowers people to pursue their passions and help our business succeed. Our global talent promotion process recognizes colleagues for exceptional dedication and service to clients.
Developing and Rewarding Our People We focus on making Korn Ferry a firm that energizes, develops, rewards and empowers people to pursue their passions and help our business succeed. Our global talent promotion process recognizes colleagues for exceptional dedication and service to clients.
We lead with our Marquee and Regional Accounts, approximately 350 accounts or 2% of our total clients which represent 36% of our total fee revenue. We continue to invest in Global Account Leaders (“GALs”), exiting the year with more than 60 colleagues in this role.
Our "Marquee" and "Regional" accounts lead these activities with approximately 340 accounts or 2% of our total clients, representing more than 35% of our total fee revenue. We continue to invest in Global Account Leaders (“GALs”), resulting in us exiting the year with more than 70 colleagues in this role.
We are transforming how clients address their talent management needs. We have evolved from a mono-line business to a multi-faceted consultancy, giving our consultants more opportunities to engage with clients. The expansion of our business into larger markets offers higher growth potential and more durable and visible revenue streams.
We have evolved from a mono-line business to a multi-faceted consultancy, giving our consultants more opportunities to engage with clients. The expansion of our business into larger markets offers higher growth potential and more durable and visible revenue streams. The Korn Ferry Institute The Korn Ferry Institute is our research and analytics arm.
Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of why management believes the presentation of these non-GAAP financial measures provide meaningful supplemental information regarding Korn Ferry’s performance. During fiscal 2022, we continued with our balanced approach to capital allocation.
Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of why management believes the presentation of non-GAAP financial measures provide meaningful supplemental information regarding Korn Ferry’s performance.
Summary of financial fiscal 2022 highlights: • Fee revenue was $349.0 million, an increase of 21.5% compared to fiscal 2021, representing 13% of total fee revenue. • Subscription and License fee revenue was $108.7 million, an increase of 21% compared to fiscal 2021. • Adjusted EBITDA and Adjusted EBITDA margin were $110.1 million and 31.5%, respectively.
Summary of financial fiscal 2023 highlights: • Fee revenue was $354.7 million, an increase of 2.0% compared to fiscal 2022, representing 13% of total fee revenue. • Subscription and License fee revenue was $119.7 million, an increase of 10% compared to fiscal 2022. • Adjusted EBITDA and Adjusted EBITDA margin were $97.5 million and 27.5%, respectively.
We strive to learn, grow, to be better today than we were yesterday , a nd always do our best for our clients, colleagues, and shareholders. As a global corporation, our commitment is to act ethically, which begins with each of us. This thinking is embedded in our core values and guides how we work together and with others.
We actively help our colleagues grow and develop with mentoring and support. We strive to learn, grow, to be better today than we were yesterday, and always do our best for our clients, colleagues, and shareholders. As a global corporation, our commitment is to act ethically, which begins with each of us.
We are achieving this in collaboration with IT, Digital, and solutions for faster, easier access to insights, outcomes, and benchmarks. Global Delivery Capability We believe a key differentiator for us is our global delivery capability. This allows us to support all parts of our business to give clients value-added services and solutions across the globe.
Global Delivery Capability We believe a key differentiator for us is our global delivery capability. This allows us to support the varied parts of our business to give clients value-added services and solutions across the globe.
Summary of financial fiscal 2022 highlights: • Fee revenue was $650.2 million, an increase of 26.1% compared to fiscal 2021, representing 25% of total fee revenue. • Adjusted EBITDA and Adjusted EBITDA margin were $116.1 million and 17.9%, respectively. • The number of consulting and execution staff at year-end was 1,841, an increase of 276 compared to fiscal 2021 with an increase in the average bill rate (fee revenue divided by the number of hours worked by consultants and execution staff) of $38 per hour or 12% compared to fiscal 2021.
Summary of financial fiscal 2023 highlights: • Fee revenue was $677.0 million, an increase of 4.0% compared to fiscal 2022, representing 24% of total fee revenue. • Adjusted EBITDA and Adjusted EBITDA margin were $108.5 million and 16.0%, respectively. • The number of consulting and execution staff at year-end was 1,853 with an increase in the average bill rate (fee revenue divided by the number of hours worked by consultants and execution staff) of $10 per hour or 3% compared to fiscal 2022.
We can bring the right people from anywhere in the world to our clients at the right time both in physical and virtual working environments, which is a capability that is particularly crucial as business needs and conditions continue to change rapidly. 7 Competition Korn Ferry operates in a rapidly changing global marketplace with a diverse range of organizations that offer services and solutions like those we offer.
We believe we can bring the right people from anywhere in the world to our clients at the right time both in physical and virtual working environments, which is a capability that is particularly crucial as business needs and conditions continue to change rapidly.
We work with: • 97% of the S&P 100 , and 85% of the S&P 500 • 92% of the Euronext 100 • 85% of the FTSE 100 • 89% of the S&P Europe 350 • 68% of the S&P Asia 50 • 73% of the S&P Latin America 40 In addition, we work with: • 2 in every 3 best companies to work for (Fortune Magazine) • 1 in every 2 of the fastest growing companies in the world (Fortune Magazine) • 80% of the top companies changing the world (Fortune Magazine) • 80% of the world’s top performing companies (Drucker Institute) • 96% of the top 50 world's most admired companies (Fortune Magazine) We also continued to make significant investments—in strategic acquisitions and the innovation and development of our assets, platforms, core capabilities, and solutions, all while we sought to attract, retain, and develop our people.
We work with: • 96% of the S&P 100, and 85% of the S&P 500 • 94% of the Euronext 100 • 85% of the FTSE 100 • 91% of the S&P Europe 350 • 60% of the S&P Asia 50 • 80% of the S&P Latin America 40 In addition, we work with: • 3 in every 4 best companies to work for (Fortune Magazine) • 1 in every 2 of the fastest growing companies in the world (Fortune Magazine) • 79% of the world’s top performing companies (Drucker Institute) • 96% of the top 50 world's most admired companies (Fortune Magazine) We also continued to make significant investments across the breadth of our business and in our people.
As of April 30, 2022, 72% of our workforce in the U.S. is female or from an underrepresented group. Broken down further, 64% of our workforce in the U.S. is female, and 65% of our global workforce is female. Our global age demographic is 62% Millennials (ages 26-41) , G en Z/ Centennials (ages 25 and below).
Broken down further, 62% of our workforce in the U.S. is female, and 64% of our global workforce is female. Our global age demographic is 53% Millennials (ages 26-41) and 8% Gen Z/Centennials (ages 25 and below).
Today, we believe we are the organizational consultancy that is uniquely positioned to help companies look at talent and strategy together, ensuring that they have the right people in the right places and are providing them with the right rewards.
We believe we are the premier organizational consultancy uniquely positioned to leverage our extensive intellectual property to help companies bring talent and strategy together, helping them have the right people in the right places and providing them with the right rewards.
Competition —The people and organizational consulting market is fragmented, with different company offers for our core solutions. Our competitors include consulting organizations affiliated with accounting, insurance, information systems, and strategy consulting firms such as McKinsey, Willis Towers Watson and Deloitte. We also compete with smaller boutique firms specializing in specific regional, industry, or functional leadership and HR consulting aspects. 2.
Competition —The people and organizational consulting market is fragmented, with different companies offering our core solutions. Our competitors include consulting organizations affiliated with accounting, insurance, information systems, and strategy consulting firms such as McKinsey, Willis Towers Watson and Deloitte.
We support this work with a comprehensive range of best-in-class lP and data. The Consulting teams employ an integrated approach across our core capabilities and integrated solutions described above, each one intended to strengthen our work and thinking in the next, to help clients execute their strategy in a digitally enabled world.
The Consulting teams employ an integrated approach across our core capabilities and integrated solutions described above to help clients execute their strategy in a digitally enabled world.
Robust Research and Thought Leadership to anticipate and innovate : We explore trends and define leadership and human and organizational performance for a fast-changing economy.
Robust Research and Thought Leadership to anticipate and innovate : We explore trends and define leadership and human and organizational performance for a fast-changing economy. Some project examples from fiscal 2023 include research around: • Purpose • ESG • Neuroscience • Gen Z 2.
Summary of financial fiscal 2022 highlights: • Fee revenue was $691.9 million, an increase of 87% compared to fiscal 2021, representing 26% of total fee revenue. • Adjusted EBITDA and Adjusted EBITDA margin were $165.1 million and 23.9%, respectively.
Summary of financial fiscal 2023 highlights: • Fee revenue was $424.6 million, an increase of 8% compared to fiscal 2022, representing 15% of total fee revenue. • Adjusted EBITDA and Adjusted EBITDA margin were $52.6 million and 12.4%, respectively.
We work hard to build an environment of recognition by acknowledging others and appreciating their contributions and achievements. Our global talent promotion process recognizes colleagues for exceptional dedication and service to clients, embracing our firm's purpose and values, outstanding collaboration and stretching to meet expectations. We believe diversity drives innovation and connects us to our customers and communities.
Our global talent promotion process recognizes colleagues for exceptional dedication and service to clients, embracing our firm's purpose and values, outstanding collaboration and stretching to meet expectations. We believe diversity drives innovation and connects us to our customers and communities. We are committed to building strong teams of people with diverse experiences, backgrounds, and perspectives.
As of April 30, 2022, we had 10,779 full-time employees: 5 Consultants and execution staff 1 Support staff 2 Total employees Executive Search 587 1,174 1,761 Consulting 1,841 396 2,237 Digital 305 985 1,290 RPO & Professional Search 738 4,544 5,282 Corporate — 209 209 Total 3,471 7,308 10,779 1 consultants and execution staff, primarily responsible for originating client services 2 Support staff includes associates, researchers, administrative, and support staff Business challenges we solve Our judgment and expertise are built from decades of experience and insight into the business challenges companies are grappling with across industries.
As of April 30, 2023, we had 10,697 full-time employees: Consultants and execution staff 1 Support staff 2 Total employees Consulting 1,853 363 2,216 Digital 347 1,077 1,424 Executive Search 602 1,218 1,820 Professional Search & Interim 498 591 1,089 RPO 180 3,750 3,930 Corporate — 218 218 Total 3,480 7,217 10,697 1 Consultants and execution staff, primarily responsible for originating client services 2 Support staff includes associates, researchers, administrative, and support staff Business Challenges We Solve Our judgment and expertise have been built from decades of experience and insight into the business challenges companies are grappling with across industries.
We are a Company with a more diverse service and solution offering that is aligned with our clients’ desire to synchronize their strategy, operations, and talent to drive superior performance.
Korn Ferry has evolved from our executive search-focused roots into a company with a more diverse service and digital and other solution offering that is designed to align with our clients’ desire to synchronize their strategy, operations, and talent to drive superior performance.
Building long-term client relationships of scale delivers less cyclical, more resilient revenue and new business through structured, programmatic account planning and strategic investments in account management talent. Elevating our Voice Collaboration with sales and marketing teams has enabled a deeper connection with our customers through our thought leadership and best practices.
We believe building long-term client relationships of scale delivers less cyclical, more resilient revenue and new business through structured, programmatic account planning and strategic investments in account management talent.
Our five core capabilities include: • Organization Strategy: We map talent strategy to business strategy, designing operating models and organization structures that help companies put plans into action. • Assessment and Succession: We identify the talent organizations need, compare that to the talent they have, and help close the gaps. • Talent Acquisition: From executive search to recruitment process outsourcing ("RPO"), we help organizations attract and retain the right people across functions and levels. • Leadership and Professional Development: We develop leaders along every stage of their career journey with a spectrum of intensive high-touch and scalable high-tech development experiences. • Total Rewards: We help organizations pay their people fairly for doing the right things with rewards they value at a cost that the organization can afford.
Leaders and employees are empowered to take action on their own development, while companies use strategic perspectives to build stronger plans and make smarter investments today and into the future. • Talent Acquisition: From Executive Search, Professional Search & Interim and Recruitment Process Outsourcing ("RPO") covering single to multi-hire permanent positions and interim contractors, we help organizations attract and retain the right people across functions, levels and skills. • Leadership and Professional Development: We help develop leaders along each stage of their career with a spectrum of intensive high-touch and scalable high-tech development experiences. 2 • Total Rewards: We help organizations pay their people fairly for doing the right things with rewards they value at a cost that the organization can afford.
We strive to foster a supportive, respectful culture where everyone feels valued for their contribution, can do their best work and exceed their potential. Our approach to talent acquisition, development, recognition, engagement and benefits are designed to support this approach. Our priority is to hire without bias and provide under-represented talent with equal opportunity across the firm.
Our approach to talent acquisition, development, recognition, engagement and benefits are designed to support this approach. Our priority is to hire without bias and provide under-represented talent with equal opportunity across the firm. We work hard to build an environment of recognition by acknowledging others and appreciating their contributions and achievements.
They also reflect the experience we want our clients to have when they work with us. We seek to embrace people with different points of view. We actively help our colleagues grow and develop with mentoring and support.
Our Beliefs and Behaviors Our culture starts with our values of Inclusion, Honesty, Knowledge, and Performance . Our values set the standard for what we expect of all our people. They also reflect the experience we want our clients to have when they work with us. We seek to embrace people with different points of view.
The depth and breadth of our offerings across the talent lifecycle—from attraction to assessment to recruitment to development, management, and reward—place us in a distinctive position. We offer end-to-end solutions—a view into an organization’s entire talent ecosystem—to create positive client outcomes.
Our Core Capabilities We continue to integrate, replicate and scale our solutions and to lead innovation in the digitally enabled new world of work. The depth and breadth of our offerings across the talent lifecycle—from attraction to assessment to recruitment to development, management, and reward—place us in a distinctive position.
Our geographic markets bring together capabilities from across the organization—infusing industry and functional expertise and skills—to deliver value to our partners. We operate in 105 offices in 53 countries, helping us deliver our solutions globally, wherever our clients do business. We continue our commitment to diversity and inclusion, hiring, promoting, and extending opportunities to women and underrepresented groups.
We operate in 108 offices in 53 countries, helping us deliver our solutions globally, wherever our clients do business. We continue our commitment to diversity and inclusion, hiring, promoting, and extending opportunities to women and underrepresented groups. As of April 30, 2023, 70% of our workforce in the U.S. is female or from an underrepresented group.
For fiscal 2022, our exceptional performance reflects the relevance of our strategy, the top-line synergies created by our end-to-end human capital solutions, the resilience of our colleagues, and increasing connection with our Korn Ferry brand. The past year has presented many challenges. However, with the commitment of our colleagues, we have concluded the year with strong, record results.
Our fiscal 2023 performance reflects the relevance of our strategy, the top-line synergies created by our end-to-end talent and leadership solutions, and the increasing reach and relevance of the Korn Ferry brand. Thanks to the passion and performance of our colleagues, we have concluded the year with strong results, in what was a very challenging macroeconomic environment.
This structure allows us to focus on our clients and partner with them to solve the challenges they face in their businesses. 1. Consulting aligns organization structure, culture, performance, and people to drive sustainable growth by addressing four fundamental talent needs: Organization Strategy, Assessment and Succession, Leadership and Professional Development, and Total Rewards.
Consulting aligns organizational structure, culture, performance, development, and people to drive sustainable growth by addressing four fundamental organizational and talent needs: Organization Strategy, Assessment and Succession, Leadership and Professional Development, and Total Rewards. We enable this work with a comprehensive set of Digital Performance Management Tools, based on our best-in-class IP and 3 data.
In addition, we have made investments in technology, learning platforms, virtual coaching, individual learning journeys, data insights, and intellectual property that permeates all our solutions. The Korn Ferry Institute The Korn Ferry Institute is our research and analytics arm.
Innovation & Intellectual Property Korn Ferry is dedicated to developing leading-edge services and leveraging innovation. We have made investments in technology, learning platforms, virtual coaching, individual learning journeys, data insights, and intellectual property that permeates all our solutions. With these investments, we are transforming how clients address their talent management needs.
Fiscal 2022 Performance Highlights Our results reflect the dedication and hard work of our more than 10,770 talented colleagues. They focus on creating value that matters for all our stakeholders, the clients, shareholders, and the communities in which we operate.
They focus on creating value for our stakeholders, our colleagues themselves, our clients, our shareholders, and the communities in which we operate.
Client Base —During fiscal 2022, the RPO & Professional Search segment partnered with more than 3,500 clients across the globe, and 50% of RPO & Professional Search’s fiscal 2022 fee revenue was referred from Korn Ferry’s other lines of business.
Client Base —During fiscal 2023, the RPO segment partnered with more than 300 clients across the globe, and 54% of RPO fiscal 2023 fee revenue was referred from Korn Ferry’s other lines of business. Competition —We primarily compete for RPO business with other global RPO providers such as Cielo, Alexander Mann Solutions, IBM, Allegis, Kelly Services and Randstad.
We also extended the use of our Korn Ferry Advance platform, used externally by clients for career coaching and career development, into an internal development program platform. We run a global colleague advisory council that offers feedback to senior leadership on the colleague experience within Korn Ferry.
We run a global colleague advisory council that offers feedback to senior leadership on the colleague experience within Korn Ferry. Also, our internal employee engagement program, the Korn Ferry Founder Awards, recognizes and celebrates exceptional performance. Employee Well-being The well-being of our employees is a focus.
We work to understand the relevant macro trends impacting society and the future of work. A s the world/workforce emerges from COVID-19, we believe it is even more evident that the world of work has permanently changed.
We work to understand the relevant macro trends impacting society and the future of work. After the reopening that followed the global pandemic, it is evident that the world of work has permanently changed and with the emergence of technologies like artificial intelligence ("AI"), the evolution continues.
We also work under the One Korn Ferry umbrella to help clients plan for their broader talent acquisition needs as part of their business strategy planning. Finally, our corporate center manages finance, legal, technology/IT, human resources, marketing, and our research arm, the Korn Ferry Institute. We help clients in four geographic markets: North America, Latin America, EMEA, and APAC.
Finally, our corporate center manages finance, legal, technology/IT, HR, marketing, and our research arm, the Korn Ferry Institute. We help clients in four geographic markets: North America, Latin America, EMEA, and APAC. Our geographic markets bring together capabilities from across the organization—infusing industry and functional expertise and skills—to deliver value to our partners.
We publish whitepapers, research, trend analysis, and insights around relevant talent and people topics. Our People Culture and Workforce Our culture has evolved tremendously over the years with a team spirit of working together across different offices, regions, and practices.
Our People Culture and Workforce Our culture has evolved tremendously over the years with a team spirit of working together across different offices, regions, and practices. We strive to foster a supportive, respectful culture where everyone feels valued for their contribution, can do their best work and exceed their potential.
We continue to capitalize on the top-line synergies created by our end-to-end core and integrated solutions that address every aspect of an employee’s engagement with their employer. This manifests itself in our ability to continue to increase fee revenues referred from one line of business to another, almost 30% for fiscal 2022.
We continue to capitalize on the top-line synergies created by our end-to-end solutions that are designed to address the many aspects of an employee’s engagement with their employer.
And we hold: • Rewards data for over 23 million people • Organizational benchmark data on 12,000 entities • More than 5,000 individual success profiles covering more than 30,000 job titles • Management data on more than 150 countries. 6 Innovation & Intellectual Property Korn Ferry is dedicated to developing leading-edge services and leveraging innovation.
And we hold: • Rewards data on more than 30 million people covering some 30,000 organizations. • More than 10,000 individual success profiles covering over 30,000 job titles. • Organizational benchmark data on more than 12,000 entities. • Culture surveys on approximately 600 entities and 7.2 million respondents. • Pay policy and practice data on more than 150 countries.
Our strategic growth reflects a more balanced and sustainable organization with solid revenue and earnings streams in fiscal 2022: • Our performance drove record-breaking results, generating $2,626.7 million in fee revenue, up 45.1% compared to fiscal 2021. • Diluted Earnings Per Share was $5.98 in fiscal 2022, a new high. • Net Income Attributable to Korn Ferry was $ 326.4 million (margin 12.4%), an increase of $211.9 million compared to fiscal 2021.
Our strategic growth reflects a more balanced and sustainable organization. • Our performance was solid during what can be described as times of macroeconomic and geopolitical turbulence and uncertainty, generating $2,835.4 million in fee revenue, up 8.0% compared to fiscal 2022. • Net Income Attributable to Korn Ferry was $209.5 million.
We are now a company with a more durable business, with greater and growing relevance, and a new sustainable level of business and profitability that is poised for further growth. We continue to replicate and scale our solutions and to lead innovation at the intersection of talent and strategy in the digitally enabled new world of work.
With vision, innovation and focus as our guide, we believe we are now a company with a more durable business, with greater and expanding relevance, and with an increasingly sustainable level of business and profitability that is poised for further growth in the years to come. 1 Fiscal 2023 Performance Highlights Our results reflect the dedication and hard work of our more than 10,600 talented colleagues.
We achieve this through a systematic approach, unlocking the power and potential of their people. • Learning Development (“LDO”) : We believe businesses need to prepare for the future by creating a culture of learning that helps them quickly adapt to new trends and demands.
We help make client organizations fit for the future by putting in place strategies designed to enable our clients to achieve cost reductions while maintaining performance and growth. • Leadership Development and Coaching at Scale : Businesses need to prepare for the future by creating a culture of learning that helps them quickly adapt to new trends and demands.
Our LDO solution, leveraging our Korn Ferry Advance platform, takes our expertise in leadership coaching and combines it with technology to provide quality coaching at scale across organizations. Our Businesses We have seven reportable segments that operate through the following four lines of business, supported by a corporate center.
Leveraging our Korn Ferry Advance platform, we combine our expertise in leadership development with technology to provide quality coaching and development at scale across organizations. • M&A Solutions : We use a framework that helps organizations look beyond balance sheets and focus on people.
Operating income and Adjusted EBITDA* were $470.1 million (margin of 17.9%) and $538.9 million (margin of 20.5%), respectively, an increase of $314.3 million and $252.6 million, respectively, compared to fiscal 2021. * Consolidated Adjusted EBITDA are non-GAAP financial measures and have limitations as analytical tools. See Item 7.
We also spent $18.5 million on debt service costs, and returned $93.9 million and $33.0 million to shareholders in the form of share repurchases and dividends, respectively. * Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA margin are non-GAAP financial measure and have limitations as analytical tools. See Item 7.
Competition —We primarily compete for RPO business with other global RPO providers such as Cielo, Alexander Mann Solutions, IBM, Allegis, Kelly Services and Randstad and professional search assignments with regional contingency and large national retained recruitment firms such as Robert Half, Michael Page, Harvey Nash, Robert Walters and BTG. We believe our competitive advantage is distinct.
Client Base —During fiscal 2023, the Professional Search & Interim segment partnered with more than 4,000 clients across the globe, and 32% of Professional Search & Interim’s fiscal 2023 fee revenue was referred from Korn Ferry’s other lines of business. 5 Competition —We primarily compete for Professional Search & Interim business with regional contingency and large national retained recruitment firms such as Robert Half, Michael Page, Harvey Nash, Robert Walters and BTG.
However, we believe no other company provides the same full range of services, uniquely positioning us for success in this highly fragmented, competitive landscape. And we believe we are poised for even more sustainable growth over the next fiscal year. Our Market and Approach Industry Recognition Our company culture and excellent work within the industry are widely recognized.
Competition Korn Ferry operates in a rapidly changing global marketplace with a diverse range of organizations that offer services and solutions like those we offer. However, we believe no other company provides the same full range of services, uniquely positioning us for success in this highly fragmented, talent management landscape.
Summary of financial fiscal 2022 highlights: • Fee revenue was $935.6 million, an increase of 47% compared to fiscal 2021, representing 36% of total fee revenue. • Adjusted EBITDA and Adjusted EBITDA margin were $257.6 million and 27.5%, respectively. • In fiscal 2022, we opened more than 7,200 new engagements with an average of 555 consultants.
This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa ("EMEA"), Executive Search Asia Pacific ("APAC") and Executive Search Latin America). 4 Summary of financial fiscal 2023 highlights: • Fee revenue was $875.8 million, a decrease of 6% compared to fiscal 2022, representing 31% of total fee revenue. • Adjusted EBITDA and Adjusted EBITDA margin were $205.8 million and 23.5%, respectively.* • In fiscal 2023, we opened more than 6,300 new engagements with an average of 594 consultants. *Executive Search Adjusted EBITDA and Executive Search Adjusted EBITDA margin are non-GAAP financial measures and have limitations as analytical tools.
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These investments are intended to help us further differentiate our competitiveness in the marketplace. Today, as a result of our investments, innovation and growth, we believe we are uniquely positioned to address the most pressing human capital issues faced by organizations worldwide. We continue to transform ourselves and our clients.
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This commitment includes strategic acquisitions and the innovation and development of our platforms, solutions and ways of working. A testament to Korn Ferry’s forward-thinking approach is the acquisition of our third and fourth Interim hiring firms in the last 18 months.
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Our deeply embedded intellectual property (“IP”), data, and content within our solutions are designed to help clients solve new and evolving issues within today’s dynamic work landscape.
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This strategic decision has not only boosted our standing, particularly in the Professional Search and Interim sectors, but we believe also enables us to capitalize on significant opportunities for growth while effectively responding to prevailing shifts in the workforce.
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We continue to align to the most pressing issues for organizations: workforce transformation, diversity equity & inclusion ("DE&I”) initiatives, environmental, social & governance (“ESG”) matters, accelerating revenue growth (“ARG”) in a post-COVID-19 world, and new career trends like career nomads who are more frequently changing jobs.
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These shifts include a heightened focus on agility and cost-management, a growing need for specialized expertise and on-demand skills, as well as the accommodation of evolving employee preferences and dynamics within the workforce.
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We think we are uniquely positioned to help clients and their people exceed their potential in this environment. We now place an even greater focus on driving a One Korn Ferry story. Partnering with internal and external stakeholders, this singular vision engages our employees, resonates in the broader market, and is a platform for 1 differentiation and sustainable growth.
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These investments are intended to expand our offerings to help us further differentiate ourselves in the marketplace and reflect our continued focus on high-demand areas emerging in this environment. A critical driver of our success has been the evolution and maturation of our go-to-market (“GTM”) activities.
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We develop and train nearly one million professionals a year and place on average a candidate every three minutes, each business hour. A critical driver of our success has been the evolution and maturation of our go-to-market (“GTM”) activities.
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This manifests itself in our ability to continue generating additional fee revenues based on referrals from one line of business to another, generating more than 25% of total fee revenues for fiscal 2023.
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We repurchased approximately 1,471,000 shares of stock for $98.8 million and paid dividends of $26.8 million. Recognizing the opportunities of a large addressable market and the shift from career employee to career nomad, we acquired The Lucas Group, which brings substantial professional search and interim expertise to Korn Ferry.
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In fact, by integrating the previously mentioned acquired companies into Korn Ferry, we were able to generate an incremental $50.0 million in fee revenues since November 1, 2021, (the date of acquisition of our first Interim business) through referrals between the acquired companies and our business prior the acquisitions.
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We also recently completed the acquisition of Patina Solutions Group, an interim executive solutions firm that provides access to a network of C-suite, top-tier, and professional interim talent. Both additions are expected to enhance our industry-leading search portfolio. These two acquisitions were completed with $133.8 million of our capital.
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Operating income and Adjusted EBITDA* were $316.3 million (margin of 11.2%) and $457.3 million (margin of 16.1%), respectively. • Diluted Earnings Per Share was $3.95. • During fiscal 2023, we continued with our balanced approach to capital allocation.
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We reinvested $45.6 million of capital into the development of technology-enabled products and solutions. The Korn Ferry Story Our Strategy As the preeminent organizational consulting firm, we act as business advisors in talent and strategy and bring together solutions for our clients. Our approach is focused on the following priorities to increase our client and commercial impact: 1.
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For the full year, the Company invested $254.8 million in acquisitions and $61.0 million in capital expenditures primarily related to the Digital business and corporate infrastructure.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurther, pandemics can subject our operations and financial performance to a number of risks, including those discussed below: ▪ Operations-related risks: Across all of our businesses, we can face operational challenges including a heightened need to protect employee health and safety, office shutdowns, workplace disruptions, cybersecurity risks, and restrictions on the movement of people, both at our own offices and at those of our clients and our suppliers. ▪ Client-related risks: Our clients will be disrupted by quarantines , fluctuations in their financial condition, and restrictions on employees’ ability to work and office closures.
Biggest changeIn addition, pandemics can subject our operations and financial performance to a number of risks, including operational challenges, such as heightened attention to employee health and safety, workplace disruptions or shutdowns, cybersecurity risks, supplier disruptions or delays, and travel restrictions, as well as client-related risks, as clients may experience similar disruptions, fluctuations, and restrictions that may impact our ability to provide products and services to our clients (or for clients to pay for such products and services) and may reduce demand for our products and services.
We face significant competition: competition in our industries could result in lost market share, reduced demand for our services, and/or require us to charge lower prices for our services, which could adversely affect our operating results and future growth. We continue to face significant competition to each of our services and product offerings.
Competition in our industries could result in lost market share, reduced demand for our services, and/or require us to charge lower prices for our services, which could adversely affect our operating results and future growth. We continue to face significant competition to each of our services and product offerings.
The process of integrating an acquired business subjects us to a number of risks, including: ▪ diversion of management attention; ▪ amortization of intangible assets, adversely affecting our reported results of operations; ▪ inability to retain and/or integrate the management, key personnel and other employees of the acquired business; ▪ inability to properly integrate businesses resulting in operating inefficiencies; ▪ inability to establish uniform standards, disclosure controls and procedures, internal control over financial reporting and other systems, procedures and policies in a timely manner; ▪ inability to retain the acquired company’s clients; ▪ exposure to legal claims for activities of the acquired business prior to acquisition; and ▪ incurrence of additional expenses in connection with the integration process.
The process of integrating an acquired business subjects us to a number of risks, including: ▪ diversion of management attention; ▪ amortization of intangible assets, adversely affecting our reported results of operations; ▪ inability to retain and/or integrate the management, key personnel and other employees of the acquired business; ▪ inability to properly integrate businesses resulting in operating inefficiencies; 22 ▪ inability to establish uniform standards, disclosure controls and procedures, internal control over financial reporting and other systems, procedures and policies in a timely manner; ▪ inability to retain the acquired company’s clients; ▪ exposure to legal claims for activities of the acquired business prior to acquisition; and ▪ incurrence of additional expenses in connection with the integration process.
These restrictions limit our ability and the ability of our subsidiaries to, among other things: incur or guarantee additional debt or issue capital stock; pay dividends and make other distributions on, or redeem or 16 repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; merge or consolidate; enter into agreements that restrict the ability of subsidiaries to make dividends, distributions or other payments to us or the guarantors; in the case of the indenture governing our Notes, designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell assets.
These restrictions limit our ability and the ability of our subsidiaries to, among other things: incur or guarantee additional debt or issue capital stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; merge or consolidate; enter into agreements that restrict the ability of subsidiaries to make dividends, distributions or other payments to us or the guarantors; in the case of the indenture governing our Notes, designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell assets.
As a result, we have been and may again be materially adversely affected by future changes in tax law or policy (or in their interpretation or enforcement) in the jurisdictions where we operate, including the U.S., which could have a material adverse effect on our business, cash flow, results of operations, financial condition, as well as our effective 22 income tax rate.
As a result, we have been and may again be materially adversely affected by future changes in tax law or policy (or in their interpretation or enforcement) in the jurisdictions where we operate, including the U.S., which could have a material adverse effect on our business, cash flow, results of operations, financial condition, as well as our effective income tax rate.
For example, much of our corporate staff are based in California, which has a high level of risk from wildfires and earthquakes. The impacts of climate change present notable risks, including damage to assets and technology caused by extreme weather events linked to climate change and may otherwise heighten or exacerbate the 10 occurrence of such weather events.
For example, much of our corporate staff are based in California, which has a high level of risk from wildfires and earthquakes. The impacts of climate change present notable risks, including damage to assets and technology caused by extreme weather events linked to climate change and may otherwise heighten or exacerbate the occurrence of such weather events.
We cannot assure you that such financing will be 21 available to us at all, or at an acceptable cost. If we are unable to take timely advantage of growth opportunities, our future financial condition and competitive position may be harmed, which in turn may adversely affect the market price of our common stock.
We cannot assure you that such financing will be available to us at all, or at an acceptable cost. If we are unable to take timely advantage of growth opportunities, our future financial condition and competitive position may be harmed, which in turn may adversely affect the market price of our common stock.
Within our own operations, we face additional costs from rising energy costs which make it more expensive to power our corporate offices; efforts to mitigate or reduce our operations’ impacts from or on the environment, such as a shift to cloud technology or a leasing preference for buildings that are LEED-certified.
Within our own operations, we face additional costs: from rising energy costs, which make it more expensive to power our corporate offices; and efforts to mitigate or reduce our operations’ impacts from or on the environment, such as a shift to cloud technology or a leasing preference for buildings that are LEED-certified.
Any increased or unexpected costs or unanticipated delays in connection with the performance of fixed-fee engagements, including delays caused by factors outside our control, could make these contracts less profitable or unprofitable, which would have an adverse effect on our profit margin.
Any increased or unexpected costs or unanticipated delays in connection with the performance of fixed-fee engagements, including delays caused by factors outside our control, could make these contracts 14 less profitable or unprofitable, which would have an adverse effect on our profit margin.
The amount of our income taxes and other taxes are subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. authorities. If these audits result in assessments different from estimated amounts recorded, future financial results may include unfavorable tax adjustments.
The amount of our income taxes and other taxes are subject to audits by U.S. federal, state and local tax authorities and by non-U.S. authorities. If these audits result in assessments different from estimated amounts recorded, future financial results may include unfavorable tax adjustments.
Activist campaigns can create perceived uncertainties as to our future direction, strategy, or leadership and may result in the 23 loss of potential business opportunities, harm our ability to attract new employees, investors, and customers, and cause our stock price to experience periods of volatility or stagnation.
Activist campaigns can create perceived uncertainties as to our future direction, strategy, or leadership and may result in the loss of potential business opportunities, harm our ability to attract new employees, investors, and customers, and cause our stock price to experience periods of volatility or stagnation.
The human resource consulting market has been traditionally fragmented and a number of large consulting firms, such as McKinsey, Willis Towers Watson and Deloitte have built businesses in human resource consulting to serve these needs. Our consulting business line has and continues to face competition from human resource consulting businesses.
The human resource consulting market has been traditionally fragmented and a number of large consulting firms, such as McKinsey, Willis Towers Watson and Deloitte have built businesses in human resource consulting to serve these needs. Our consulting business line has and 10 continues to face competition from human resource consulting businesses.
Risks Related to Our Financing/Indebtedness Our indebtedness could adversely affect our financial condition, our ability to operate our business, react to changes in the economy or our industry, prevent us from fulfilling our obligations under our indebtedness and could divert our cash flow from operations for debt payments.
Risks Related to Our Financing/Indebtedness Our level indebtedness could adversely affect our financial condition, our ability to operate our business, react to changes in the economy or our industry, prevent us from fulfilling our obligations under our indebtedness and could divert our cash flow from operations for debt payments.
We have invested in developing specialized technology and IP, including proprietary systems, processes and methodologies, such as Korn Ferry Advance and Talent Hub, that we believe provide us a competitive advantage in 17 serving our current clients and winning new engagements.
We have invested in developing specialized technology and IP, including proprietary systems, processes and methodologies, such as Korn Ferry Advance and Talent Hub, that we believe provide us a competitive advantage in serving our current clients and winning new engagements.
Furthermore, our debt under our Revolver bears interest at variable rates. Despite our indebtedness levels, we and our subsidiaries may still incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage. We and our subsidiaries may incur substantial additional indebtedness in the future.
Furthermore, our debt under our Revolver bears interest at variable rates. 15 Despite our indebtedness levels, we and our subsidiaries may still incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage. We and our subsidiaries may incur substantial additional indebtedness in the future.
Our failure to retain our most productive consultants, whether in Executive Search, Consulting, Digital or RPO & Professional Search, or maintain the quality of service to which our clients are accustomed, as well as the ability of a departing consultant to move business to his or her new employer, could result in a loss of clients, which could in turn cause our fee revenue to decline and our business to be harmed.
Our failure 11 to retain our most productive consultants, whether in Executive Search, Consulting, Digital, Professional Search & Interim or RPO, or maintain the quality of service to which our clients are accustomed, as well as the ability of a departing consultant to move business to his or her new employer, could result in a loss of clients, which could in turn cause our fee revenue to decline and our business to be harmed.
Any decrease in the quality of our reputation, reduction in our compensation levels relative to our peers or restructuring of our compensation program, whether as a result of insufficient revenue, a decline in the market price of our common stock or for any other reason, could impair our ability to retain existing consultants or attract additional qualified consultants with the requisite experience, skills and established client relationships.
Any decrease in the quality of our reputation, reduction in our compensation levels relative to our peers or modifications of our compensation program, whether as a result of insufficient revenue, a decline in the market price of our common stock or for any other reason, could impair our ability to retain existing consultants or attract additional qualified consultants with the requisite experience, skills and established client relationships.
Reliance on trained professionals to configure and operate this infrastructure creates the potential for human error, leading to potential exposure of sensitive or confidential information.
Our reliance on trained professionals to configure and operate this infrastructure creates the potential for human error, leading to potential exposure of sensitive or confidential information.
Our business and financial results have been, and could be in the future, adversely affected by health epidemics, pandemics, and similar outbreaks. P andemics can cause a global slowdown in economic activity, a decrease in demand for a broad variety of goods and services, disruptions in global supply chains, and significant volatility and disruption of financial markets.
Our business and financial results have been, and could be in the future, adversely affected by health epidemics, pandemics, and similar outbreaks. Pandemics can cause a global slowdown in economic activity, a decrease in demand for a broad variety of goods and services, disruptions in global supply chains, and significant volatility and disruption of financial markets.
As a result, interest rates on the Revolver or other variable rate debt offerings could be higher or lower than current levels.
Interest rates fluctuate. As a result, interest rates on the Revolver or other variable rate debt offerings could be higher or lower than current levels.
If we do so, the risks related to our debt could increase. 15 Specifically, our level of debt could have important consequences to us, including the following: it may be difficult for us to satisfy our obligations, including debt service requirements under our outstanding debt; our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions or other general corporate purposes may be impaired; requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, including the Notes, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities and other purposes; we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited; our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt and the restrictive covenants in the Amended Credit Agreement and the indenture governing our Notes; our ability to borrow additional funds or to refinance debt may be limited ; and it may cause potential or existing customers to not contract with us due to concerns over our ability to meet our financial obligations, such as insuring against our professional liability risks, under such contracts.
Specifically, our level of debt could have important consequences to us, including the following: it may be difficult for us to satisfy our obligations, including debt service requirements under our outstanding debt; our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions or other general corporate purposes may be impaired; requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, including the Notes, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities and other purposes; we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited; our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt and the restrictive covenants in the Amended Credit Agreement and the indenture governing our Notes; our ability to borrow additional funds or to refinance debt may be limited; and it may cause potential or existing customers to not contract with us due to concerns over our ability to meet our financial obligations, such as insuring against our professional liability risks, under such contracts.
This strategy, even if effectively executed, may prove insufficient in light of changes in market conditions, technology, competitive pressures or other external factors. In addition, we plan to extend our services to new clients and into new lines of business and geographic locations.
This strategy, even if effectively executed, may prove insufficient in light of changes in market conditions, workforce trends, technology, competitive pressures or other external factors. In addition, we plan to extend our services to new clients and into new lines of business and geographic locations.
Subject to the limits contained in the Amended Credit Agreement that govern our Revolver and Delayed Draw Facility and the indenture governing our $400.0 million principal amount of the 4.625% Senior Unsecured Notes due 2027 (the “ Notes”), we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisition, or for other purposes.
Subject to the limits contained in the Amended Credit Agreement that govern our Revolver and the indenture governing our $400.0 million principal amount of the 4.625% Senior Unsecured Notes due 2027 (the “ Notes”), we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisition, or for other purposes.
Bribery Act, as well as the fact that many countries have legal systems, local laws and trade practices that are unsettled and evolving, and/or commercial laws that are vague and/or inconsistently applied; ▪ difficulties in staffing and managing global operations, which could impact our ability to maintain an effective system of internal control; ▪ difficulties in building and maintaining a competitive presence in existing and new markets; ▪ social, economic and political instability, including the repercussions of Russia’s attack on Ukraine; ▪ differences in cultures and business practices; ▪ statutory equity requirements; 20 ▪ differences in accounting and reporting requirements; ▪ repatriation controls; ▪ differences in labor and market conditions; ▪ potential adverse tax consequences; ▪ multiple regulations concerning immigration, pay rates, benefits, vacation, statutory holiday pay, workers’ compensation, union membership, termination pay, the termination of employment, and other employment laws; and ▪ the introduction of greater uncertainty with respect to trade policies, tariffs, disputes or disruptions, the termination or suspension of treaties, boycotts and government regulation affecting trade between the U.S. and other countries.
Bribery Act, as well as the fact that many countries have legal systems, local laws and trade practices that are unsettled and evolving, and/or commercial laws that are vague and/or inconsistently applied; ▪ difficulties in staffing and managing global operations, which could impact our ability to maintain an effective system of internal control; ▪ difficulties in building and maintaining a competitive presence in existing and new markets; ▪ social, economic and political instability, including the repercussions of the ongoing conflict between Russia and Ukraine and the cessation of our business in Russia; ▪ differences in cultures and business practices; ▪ statutory equity requirements; ▪ differences in accounting and reporting requirements; ▪ repatriation controls; ▪ differences in labor and market conditions; ▪ potential adverse tax consequences; ▪ multiple regulations concerning immigration, pay rates, benefits, vacation, statutory holiday pay, workers’ compensation, union membership, termination pay, the termination of employment, and other employment laws; and 20 ▪ the introduction of greater uncertainty with respect to trade policies, tariffs, disputes or disruptions, the termination or suspension of treaties, boycotts and government regulation affecting trade between the U.S. and other countries.
Future legislation, regulatory changes or policy shifts under the new U.S. administration or other governments could impact our business. Our failure to comply with applicable laws 13 and regulations could restrict our ability to provide certain services or result in the imposition of fines and penalties, substantial regulatory and compliance costs, litigation expense, adverse publicity, and loss of revenue.
Future legislation, regulatory changes or policy shifts under the current U.S. administration or other governments could impact our business. Our failure to comply with applicable laws and regulations could restrict our ability to provide certain services or result in the imposition of fines and penalties, substantial regulatory and compliance costs, litigation expense, adverse publicity, and loss of revenue.
This environment demands that we continuously improve our design and coordination of security controls across our business groups and geographies in order to protect information that we develop or that is obtained from our clients, candidates and employees.
This environment demands that we regularly improve our design and coordination of security controls across our business groups and geographies in order to protect information that we develop or that is obtained from our clients, candidates and employees.
Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.
Risks Related to Our Business Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.
Some U.S. states, including California, have also enacted cybersecurity laws requiring certain security measures of regulated entities that are broadly similar to GDPR requirements, such as the California Consumer Privacy Act and California Privacy Rights Act.
Some U.S. states, including California and Virginia, have also enacted cybersecurity laws requiring certain security measures of regulated entities that are broadly similar to GDPR requirements, such as the California Consumer Privacy Act, California Privacy Rights Act and Virginia Consumer Data Protection Act.
For example, in the past we have experienced cyber security incidents resulting from unauthorized access to our systems, which to date have not had a material impact on our business or results of operations; however, there is no assurance that such impacts will not be material in the future.
For example, in the past we have experienced cyber security incidents resulting from unauthorized access to our systems, which to date have not had a material impact on our business or results of operations; however, there is no assurance that such impacts will not be material in the future. We expect cybersecurity incidents to continue to occur in the future.
Our RPO & Professional Search services primarily compete for business with other RPO providers such as Cielo, Alexander Mann Solutions, IBM, Allegis, Kelly Services, Randstad and compete for mid-level professional search 11 assignments with regional contingency recruitment firms and large national retained recruitment firms such as Robert Half, Michael Page, Harvey Nash , Robert Walters and BTG .
Our RPO services primarily compete for business with other RPO providers such as Cielo, Alexander Mann Solutions, IBM, Allegis, Kelly Services and Randstad while Professional Search & Interim services compete for mid-level professional search assignments with regional contingency recruitment firms and large national retained recruitment firms such as Robert Half, Michael Page, Harvey Nash, Robert Walters, TekSystems and BTG.
The failure or inability to perform on the part of one or more of these critical suppliers or partners could cause significant disruptions and increased costs. We are also dependent on security measures that some of our third-party vendors and customers are taking to protect their own systems and infrastructures.
The failure or inability to perform on the part of one or more of these critical suppliers or partners have caused, and could in the future cause significant disruptions and increased costs. We are also dependent on security measures that some of our third-party vendors and customers are taking to protect their own systems and infrastructures.
As of June 24, 2022, we had approximately $400.0 million in total indebtedness outstanding, $645.3 million of availability under our $650.0 million five-year senior secured revolving credit facility (the “Revolver”) and $500 million of availability under our $500.0 million five-year senior secured delayed draw term loan facility (“Delayed Draw Facility”), both provided for under our Credit Agreement, as amended on June 24, 2022 (the “Amended Credit Agreement”) that we entered into with a syndicate of banks and Bank of America, National Association as administrative agent.
As of April 30, 2023, we had approximately $400.0 million in total indebtedness outstanding, $645.4 million of availability under our $650.0 million five-year senior secured revolving credit facility (the “Revolver”) and $500 million of availability under our $500.0 million five-year senior secured delayed draw term loan facility that expired on June 24, 2023 (“Delayed Draw Facility”), both provided for under our Credit Agreement, as amended on June 24, 2022 (the “Amended Credit Agreement”) that we entered into with a syndicate of banks and Bank of America, National Association as administrative agent.
We are subject to numerous U.S. and foreign jurisdiction laws and regulations designed to protect client, colleague, supplier and company data, such as the GDPR , which became effective in May 2018, and requires companies to meet stringent requirements regarding the handling of personal data, including its use, protection and transfer and the ability of persons whose data is stored to correct or delete such data about themselves.
We are subject to numerous U.S. and foreign jurisdiction laws and regulations designed to protect client, colleague, supplier and company data, such as the GDPR, which requires companies to meet stringent requirements regarding the handling of personal data, including its use, protection and transfer and the ability of persons whose data is stored to correct or delete such data about themselves.
Changes in our accounting estimates and assumptions and other financial and nonfinancial reporting standard could negatively affect our financial position and results of operations. We prepare our consolidated financial statements in accordance with U.S. GAAP.
Changes in our accounting estimates and assumptions and other financial reporting standards could negatively affect our financial position and results of operations. We prepare our consolidated financial statements in accordance with U.S. GAAP.
F uture events or changes in circumstances that result in an impairment of goodwill or other intangible assets would have a negative impact on our profitability and operating results. An impairment in the carrying value of goodwill and other intangible assets could negatively impact our consolidated results of operations and net worth.
Future events or changes in circumstances that result in an impairment of goodwill or other intangible assets would have a negative impact on our profitability and operating results. 19 An impairment in the carrying value of goodwill and other intangible assets could negatively impact our consolidated results of operations and net worth.
We operate in 53 countries and, during the year ended April 30, 2022, generated 49% of our fee revenue from operations outside of the U.S. We are exposed to the risk of changes in social, political, legal and economic conditions inherent in international operations.
We operate in 53 countries and, during the year ended April 30, 2023, generated 45% of our fee revenue from operations outside of the U.S. We are exposed to the risk of changes in social, political, legal and economic conditions inherent in international operations.
We cannot ensure that off-limit agreements will not impede our growth or our ability to attract and serve new clients, or otherwise harm our business.
We cannot ensure that off-limit agreements will not impede our growth or our ability to attract and serve new clients, or otherwise harm our business. We face significant competition.
As we focus on 12 developing new services, clients, practice areas and lines of business; open new offices; and engage in business in new geographic locations, our operations are exposed to additional as well as enhanced risks.
As we focus on developing new services, clients, practice areas and lines of business; open new offices; acquire or dispose of business; and engage in business in new geographic locations, our operations are exposed to additional as well as enhanced risks.
We compete with other executive and professional search and consulting firms for qualified and experienced consultants. These other firms may be able to offer greater compensation and benefits or more attractive lifestyle choices, career paths or geographic locations than we do.
We compete with other executive, professional search and interim and consulting firms for qualified and experienced consultants. These other firms may be able to offer greater bonuses, incentives or compensation and benefits or more attractive lifestyle choices, career paths, office cultures, or geographic locations than we do.
In addition, our consultants oftentimes perform services at the physical locations of our clients. N atural disasters, pandemics, disruptions to travel and transportation or problems with communications systems negatively impact our ability to perform services for, and interact with, our clients at their physical locations , which could have an adverse effect on our business and results of operations.
Natural disasters, pandemics, disruptions to travel and transportation or problems with communications systems negatively impact our ability to perform services for, and interact with, our clients at their physical locations, which could have an adverse effect on our business and results of operations.
As part of our corporate strategy, we are attempting to leverage our research and consulting services to sell a full range of services across the life cycle of a policy, program, project or initiative, and we are regularly searching for ways to provide new services to clients.
As part of our corporate strategy, we are attempting to leverage our research and consulting services to sell a full range of services across the life cycle of a policy, program, project or initiative, and we are regularly searching for ways to provide new services to clients, such as our recent entry into the Interim business and strategic acquisitions.
We are subject to risk as it relates to software that we license from third parties. We license software from third parties, much of which is integral to our systems and our business. The licenses are generally terminable if we breach our obligations under the license agreements.
We license software from third parties, much of which is integral to our systems and our business. The licenses are generally terminable if we breach our obligations under the license agreements.
Our success depends in large part upon our ability to store, retrieve, process, manage and protect substantial amounts of information. To achieve our strategic objectives and to remain competitive, we must continue to develop and enhance our information systems.
Our success depends in large part upon our ability to store, retrieve, process, manage and protect substantial amounts of information. Our information systems are subject to the risk of failure, obsolescence and inadequacy. To achieve our strategic objectives and to remain competitive, we must continue to develop and enhance our information systems.
We cannot be sure that our current insurance against the effects of a disaster regarding our information technology or our disaster recovery procedures will continue to be available at reasonable prices, cover all our losses or compensate us for the possible loss of clients occurring during any period that we are unable to provide business services.
We cannot be sure that our current insurance against the effects of a disaster regarding our information technology or our disaster recovery procedures will continue to be available at reasonable prices, cover all our losses or compensate us for the possible loss of clients occurring during any period that we are unable to provide business services. 17 We are subject to risk as it relates to software that we license from third parties.
Actual results could differ from the estimates we make based on historical experience and various assumptions believed to be reasonable based on specific circumstances , and changes in accounting standards could have an adverse impact on our future financial position and results of operations.
Actual results could differ from the estimates we make based on historical experience and various assumptions believed to be reasonable based on specific circumstances, and changes in accounting standards could have an adverse impact on our future financial position and results of operations. Unfavorable tax laws, tax law changes and tax authority rulings may adversely affect results.
We and our subsidiaries are subject to covenants, representations and warranties in respect of the Revolver, including financial covenants as defined in the Amended Credit Agreement. See “Note 18 – Subsequent Events – Credit Facility” of our notes to our consolidated financial statements included in this Annual Report on Form 10-K.
We and our subsidiaries are subject to covenants, representations and warranties in respect of the Revolver, including financial covenants as defined in the Amended Credit Agreement. See “Note 11 –Long-Term Debt ” of our notes to our consolidated financial statements included in this Annual Report on Form 10-K.
The billing rates of our consultants that we are able to charge are also affected by a number of factors, including: our clients’ perception of our ability to add value through our services; the market demand for the services we provide , which may vary globally or within particular industries that we serve ; an increase in the number of clients in the government sector in the industries we serve; the introduction of new services by us or our competitors; our competition and the pricing policies of our competitors; and current economic conditions. 14 If we are unable to achieve and maintain adequate overall utilization, as well as maintain or increase the billing rates for our consultants, our financial results could materially suffer.
The billing rates of our consultants that we are able to charge are also affected by a number of factors, including: our clients’ perception of our ability to add value through our services; the market demand for the services we provide, which may vary globally or within particular industries that we serve; an increase in the number of clients in the government sector in the industries we serve; the introduction of new services by us or our competitors; our competition and the pricing policies of our competitors; and current economic conditions.
As of June 24, 2022, we had $645.3 million of availability to incur additional secured indebtedness under our Revolver and $500 million of availability to incur additional secured indebtedness under our Delayed Draw Facility. Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly. Interest rates fluctuate.
As of April 30, 2023, we had $645.4 million of availability to incur additional secured indebtedness under our Revolver and $500 million of availability to incur additional secured indebtedness under our Delayed Draw Facility that expired on June 24, 2023. Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.
As these laws continue to evolve, we may be required to make changes to our services, solutions and/or products so as to enable the Company and/or our clients to meet the new legal requirements, including by taking on more onerous obligations in our contracts, limiting our storage, transfer and processing of data and, in some cases, limiting our service and/or solution offerings in certain locations.
New privacy laws in Colorado will take effect in calendar year 2023, and we expect that other states will continue to adopt legislation in this area. 18 As these laws continue to evolve, we may be required to make changes to our services, solutions and/or products so as to enable the Company and/or our clients to meet the new legal requirements, including by taking on more onerous obligations in our contracts, limiting our storage, transfer and processing of data and, in some cases, limiting our service and/or solution offerings in certain locations.
If any factor, including poor performance or negative publicity, whether or not true, hurts our reputation, we may experience difficulties in competing successfully for both new engagements and qualified consultants, which could seriously harm our business.
Any client who is dissatisfied with our services can adversely affect our ability to secure new engagements. If any factor, including poor performance or negative publicity, whether or not true, hurts our reputation, we may experience difficulties in competing successfully for both new engagements and qualified consultants, which could seriously harm our business.
All of our acquisitions have been accounted for as purchases and involved purchase prices well in excess of tangible 19 asset values, resulting in the creation of a significant amount of goodwill and other intangible assets.
All of our acquisitions have been accounted for as purchases and involved purchase prices well in excess of tangible asset values, resulting in the creation of a significant amount of goodwill and other intangible assets. As of April 30, 2023, goodwill and purchased intangibles accounted for approximately 25% and 3%, respectively, of our total assets.
Our systems and networks are vulnerable to computer viruses, malware, worms, hackers and other security issues, including physical and electronic break-ins, router disruption, sabotage or espionage, disruptions from unauthorized access and tampering (including through social engineering such as phishing attacks), impersonation of authorized users and coordinated denial-of-service attacks.
Our systems and networks and the vendors who provide us services are vulnerable to incidents, including physical and electronic break-ins, attacks by hackers, computer viruses, malware, worms, router disruption, sabotage or espionage, ransomware attacks, supply chain attacks, disruptions from unauthorized access and tampering (including through social engineering such as phishing attacks), employee error and misconduct, impersonation of authorized users and coordinated denial-of-service attacks.
We may also lose clients if the departing Executive Search, Consulting, Digital or RPO & Professional Search consultant has widespread name recognition or a reputation as a specialist in his or her line of business in a specific industry or management function.
We may also lose clients if the departing consultant has widespread name recognition or a reputation as a specialist in his or her line of business in a specific industry or management function. We could also lose additional consultants if they choose to join the departing consultant at another executive search or consulting firm.
Many of those technological changes may (i) reduce demand for our services, (ii) enable the development of competitive products or services, or (iii) enable our current customers to reduce or bypass the use of our services, particularly in lower-skill job categories. Additionally, rapid changes in artificial intelligence and block chain-based technology are increasing the competitiveness landscape.
Many of those technological changes may (i) reduce demand for our services, (ii) enable the development of competitive products or services, or (iii) enable our current customers to reduce or bypass the use of our services, particularly in lower-skill job categories.
We may not be successful in anticipating or responding to these changes and demand for our services could be further reduced by advanced technologies being deployed by our competitors. The effort to gain technological expertise and develop new technologies in our business may require us to incur significant expenses.
We may not be successful in anticipating or responding to these changes and demand for our services could be further reduced by advanced technologies being deployed by our competitors.
As our business continues to evolve and we provide a wider range of services, we will become increasingly dependent upon our employees, particularly those operating in business environments less familiar to us. Failure to identify, hire, train and retain talented employees who share our values could have a negative effect on our reputation and our business.
As our business continues to evolve and we provide a wider range of services, we will become increasingly dependent upon our employees, particularly those operating in business environments less familiar to us.
Our efforts to align our cost structure with the current realities of our markets may not be successful. When actual or projected fee revenues are negatively impacted by weakening customer demand, we have and may again find it necessary to take cost cutting measures so that we can minimize the impact on our profitability.
When actual or projected fee revenues are negatively impacted by weakening customer demand, we have and may again find it necessary to take cost cutting measures so that we can minimize the impact on our profitability, such as the restructuring recently initiated in the second half of fiscal 2023.
We are exposed to potential claims with respect to the executive search process and our consulting services, among numerous other matters. For example, a client could assert a claim for matters such as breach of an off-limit agreement or recommending a candidate who subsequently proves to be unsuitable for the position filled.
For example, a client could assert a claim for matters such as breach of an off-limit agreement or recommending a candidate who subsequently proves to be unsuitable for the position filled.
Competition for qualified personnel is intense, and we may compete with other companies that have greater financial and other resources than we do.
Our future success depends upon the continued service of our executive officers and other key management personnel. Competition for qualified personnel is intense, and we may compete with other companies that have greater financial and other resources than we do.
Accelerated and pronounced economic pressures, such as the recent inflationary cost pressures, may negatively impact our expense base by increasing our operating costs including labor costs.
Accelerated and pronounced economic pressures, such as the recent inflationary cost pressures and rise in interest rates, as well as geopolitical uncertainty, has and may continue to negatively impact our expense base by increasing our operating costs, including labor, borrowing, and other costs of doing business.
Perceptions that we do not adequately protect the privacy of information could inhibit attaining new engagements, qualified consultants and could potentially damage currently existing client relationships. 18 Data security, data privacy and data protection laws, such as the European Union General Data Protection Regulation (“GDPR”), and other evolving regulations and cross-border data transfer restrictions, may limit the use of our services, increase our costs and adversely affect our business.
Data security, data privacy and data protection laws, such as the European Union General Data Protection Regulation (“GDPR”), and other evolving regulations and cross-border data transfer restrictions, may limit the use of our services, increase our costs and adversely affect our business.
In some cases, we depend on key vendors and partners to provide technology and other support. If these third parties fail to perform their obligations or cease to work with us, our ability to execute on our strategic initiatives could be adversely affected.
If these third parties fail to perform their obligations or cease to work with us, our ability to execute on our strategic initiatives could be adversely affected. We have invested in specialized technology and other IP for which we may fail to fully recover our investment, or which may become obsolete.
We rely on information technology systems to process, transmit, and store electronic information and to communicate among our locations around the world and with our clients, partners, and employees. The breadth and complexity of this infrastructure increases the risk of security breaches which could lead to potential unauthorized disclosure of confidential information.
We rely on information technology systems to process, transmit, and store electronic information and to communicate among our locations around the world and with our clients, partners, and employees.
As technology continues to evolve, more tasks currently performed by people have been and may continue to be replaced by automation, robotics, machine learning, artificial intelligence and other technological advances outside of our control. The human resource industry has been and continues to be impacted by significant technological changes, enabling companies to offer services competitive with ours.
Our success is directly dependent on our customers’ demands for talent. As technology continues to evolve, more tasks currently performed by people have been and may continue to be replaced by automation, robotics, machine learning, artificial intelligence and other technological advances outside of our control.
A decline in our operating results or available cash could cause us to experience difficulties in complying with covenants contained in more than one agreement, which could result in our bankruptcy or liquidation.
If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected. 16 A decline in our operating results or available cash could cause us to experience difficulties in complying with covenants contained in more than one agreement, which could result in our bankruptcy or liquidation.
General Risk Factors Failing to retain our executive officers and key personnel or integrate new members of our senior management who are critical to our business may prevent us from successfully managing our business in the future. Our future success depends upon the continued service of our executive officers and other key management personnel.
These provisions could discourage an acquisition attempt or other transaction in which stockholders could receive a premium over the current market price for the common stock. 21 General Risk Factors Failing to retain our executive officers and key personnel or integrate new members of our senior management who are critical to our business may prevent us from successfully managing our business in the future.
During periods of slowed economic activity many companies hire fewer permanent employees, and our business, financial condition and results of operations may be adversely affected. If unfavorable changes in economic conditions occur, our business, financial condition and results of operations could suffer.
Demand for our services is affected by global economic conditions and the general level of economic activity in the geographic regions in which we operate. During periods of slowed economic activity, many companies hire fewer permanent employees, and our business, financial condition and results of operations may be adversely affected.
If this occurs, we would be in default under our Revolver, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation. Risks Related to Technology, Cybersecurity and Intellectual Property Social media platforms present risks and challenges that can cause damage to our brand and reputation.
If this occurs, we would be in default under our Revolver, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation. Risks Related to Technology, Cybersecurity and Intellectual Property Technological advances may significantly disrupt the labor market and weaken demand for human capital at a rapid rate.
Demand for our services is affected by global economic conditions and the general level of economic activity in the geographic regions and industries in which we operate.
Risks Related to Global Operations We are a cyclical company whose performance is tied to local and global economic conditions. Demand for our services is affected by global economic conditions, including recessions, inflation, interest rates, tax rates and economic uncertainty, and the general level of economic activity in the geographic regions and industries in which we operate.
Failing to maintain our professional reputation and the goodwill associated with our brand name could seriously harm our business. We depend on our overall reputation and brand name recognition to secure new engagements and to hire qualified professionals. Our success also depends on the individual reputations of our professionals.
We depend on our overall reputation and brand name recognition to secure new engagements and to hire qualified professionals. Our success also depends on the individual reputations of our professionals. We obtain a majority of our new engagements from existing clients or from referrals by those clients.
Furthermore, our top ten consultants in Executive Search (including all four reportable regional segments) and in our Consulting segment had generated business equal to approximately 3% and 4% of our total fee revenues, respectively.
In fiscal 2023, our top six consultants (Executive Search and Consulting) generated business equal to approximately 2% of our total fee revenues. Furthermore, our top ten consultants (Executive Search and Consulting) generated business equal to approximately 6% of our total fee revenues.
Risks Related to Our Business We face various risks related to health epidemics, pandemics, and similar outbreaks that negatively impact the operations and financial performance of many of the clients we serve.
We face various risks related to health epidemics, pandemics, and similar outbreaks that negatively impact our operations and financial performance and those of the clients we serve. The ultimate magnitude of any future pandemics or similar outbreaks depends on numerous factors, the full extent of which we may not be capable of predicting.
Risks Related to Acquisitions Acquisitions, or our inability to effect acquisitions, may have an adverse effect on our business. We have completed several strategic acquisitions of businesses in the last several years, including our acquisition of Miller Heiman Group, AchieveForum and Strategy Execution in fiscal 2020 and The Lucas Group and Patina Solutions Group, Inc. in fiscal 2022.
We have completed several strategic acquisitions of businesses in the last several years, including our acquisition of The Lucas Group and Patina Solutions Group, Inc. in fiscal 2022 and Infinity Consulting Solutions and Salo LLC in fiscal 2023.
These requirements and expectations may increase the time and cost of our efforts to monitor and comply with those obligations; limit the extent, frequency, and modality with which our consultants travel; impact our business opportunities; and expose us to liability.
These 13 requirements, expectations, and/or frameworks, which can include assessment and ratings published by third-party firms, are not synchronized and vary by stakeholder, industry, and geography; as a result, they may: increase the time and cost of our efforts to monitor and comply with those obligations; limit the extent, frequency, and modality with which our consultants travel; impact our business opportunities, supplier choices and reputation; and expose us to heightened scrutiny, liability, and risks that could negatively affect us.
We are subject to potential legal liability from clients, employees, candidates for employment, stockholders and others. Insurance coverage may not be available to cover all of our potential liability and available coverage may not be sufficient to cover all claims that we may incur.
Insurance coverage may not be available to cover all of our potential liability and available coverage may not be sufficient to cover all claims that we may incur. We are exposed to potential claims with respect to the executive search process and our consulting services, among numerous other matters.
As of April 30, 2022 , goodwill and purchased intangibles accounted for approximately 2 1 % and 3 % , respectively, of our total assets. W e review goodwill and intangible assets annually (or more frequently , if impairment indicators arise) for impairment.
We review goodwill and intangible assets annually (or more frequently, if impairment indicators arise) for impairment.
Our business and operations are impacted by developing laws and regulations, as well as evolving investor and customer expectations with regard to environmental matters, including the impacts and actions needed to address climate change. We are subject to evolving local, state, federal and/or international laws, regulations, and expectations regarding the environment and climate change.
Our business and operations are impacted by developing laws and regulations, as well as evolving investor and customer expectations with regard to, corporate responsibility matters and reporting, which expose us to numerous risks.
As we endeavor to align with the recommendations of the Sustainability Accounting Standards Board and other standards or materiality assessments related to ESG matters, we have expanded, and may in the future continue to expand, our disclosures in these areas.
These efforts have also, and may in the future include, reporting intended to address certain third-party frameworks, such as the recommendations of the Sustainability Accounting Standards Board, the Task Force for Climate-Related Financial Disclosures and other standards or material assessments related to corporate responsibility matters.
In addition, negative or inaccurate posts or comments about us on any social networking platforms could damage our reputation, brand image and goodwill. Technological advances may significantly disrupt the labor market and weaken demand for human capital at a rapid rate. Our success is directly dependent on our customers’ demands for talent.
In addition, negative or inaccurate posts or comments about us on any social networking platforms could damage our reputation, brand image and goodwill. Risks Related to Acquisitions Acquisitions, or our inability to effect acquisitions, may have an adverse effect on our business.
We could also lose additional consultants if they choose to join the departing Executive Search, Consulting, Digital or RPO & Professional Search consultant at another executive search or consulting firm. Failing to limit departing consultants from moving business or recruiting our consultants to a competitor could adversely affect our business, financial condition and results of operations.
Failing to limit departing consultants from moving business or recruiting our consultants to a competitor could adversely affect our business, financial condition and results of operations. We are working to advance culture change through the continued implementation of diversity, equity and inclusion ("DE&I") initiatives throughout our organization and the shift to a hybrid work environment.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of April 30, 2022, we leased an aggregate of approximately 1.2 million square feet of office space. The leases generally have remaining terms of 1 to 10 years and contain customary terms and conditions.
Biggest changeAs of April 30, 2023, we leased an aggregate of approximately 1.1 million square feet of office space. The leases generally have remaining terms of 1 to 9 years and contain customary terms and conditions.
We believe that our facilities are adequate for our current needs, and we do not anticipate any significant difficulty replacing such facilities or locating additional facilities to accommodate any future growth.
We 23 believe that our facilities are adequate for our current needs, and we do not anticipate any significant difficulty replacing such facilities or locating additional facilities to accommodate any future growth.
Item 2. Properties Our corporate office is in Los Angeles, California. We lease our corporate office as well as an additional 104 offices through which we conduct business that are located in North America, EMEA, Asia Pacific and Latin America, all of which are used by all of our business segments.
Item 2. Properties Our corporate office is in Los Angeles, California. We lease our corporate office as well as an additional 107 offices through which we conduct business that are located in North America, EMEA, Asia Pacific and Latin America, all of which are used by all of our business segments.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changePrior to that, he led Spherion’s workforce solutions business in North America, which provides workforce solutions in professional services and general staffing, including recruitment process outsourcing and managed services, from 2003 to 2007. Mr. Mulrooney held executive positions for almost 20 years at EDS and IBM in client services, sales, marketing and operations. Mr.
Biggest changePrior to joining Korn Ferry, he was President and Chief Operating Officer of Flynn Transportation Services, a third-party logistics company, from 2007 to 2010. Prior to that, he led Spherion’s workforce solutions business in North America, which provides workforce solutions in professional services and general staffing, including recruitment process outsourcing and managed services, from 2003 to 2007. Mr.
He was the Executive Vice President and Chief Financial Officer of the Company from March 2002 until June 30, 2007, and Chief Operating Officer from November 2003 until June 30, 2007. Prior to joining Korn Ferry, Mr. Burnison was Principal and Chief Financial Officer of Guidance Solutions, a privately held consulting firm, from 1999 to 2001.
He was the Executive Vice President and Chief Financial Officer of the Company from March 2002 until June 30, 2007, and Chief Operating Officer from October 2003 until June 30, 2007. Prior to joining Korn Ferry, Mr. Burnison was Principal and Chief Financial Officer of Guidance Solutions, a privately held consulting firm, from 1999 to 2001.
Our executive officers serve at the discretion of our Board of Directors. There is no family relationship between any executive officer or director. The following information sets forth the business experience for at least the past five years for each of our executive officers. Gary D. Burnison has been President and Chief Executive Officer of the Company since July 2007.
There is no family relationship between any executive officer or director. The following information sets forth the business experience for at least the past five years for each of our executive officers. Gary D. Burnison has been President and Chief Executive Officer of the Company since July 2007.
Item 4. Mine Safety Disclosures Not applicable. Information about our Executive Officers Name Age as of April 30, 2022 Position Gary D. Burnison 61 President and Chief Executive Officer Robert P.
Item 4. Mine Safety Disclosures Not applicable. Information about our Executive Officers Name Age as of April 30, 2023 Position Gary D. Burnison 62 President and Chief Executive Officer Robert P.
Rozek is a graduate of Canisius College in New York with a bachelor’s degree in accounting. 24 Mark Arian joined the Company as Chief Executive Officer of Korn Ferry’s Advisory segment in April 2017 and is now the Chief Executive Officer of Consulting . Prior to Korn Ferry, Mr.
Mark Arian joined the Company as Chief Executive Officer of Korn Ferry’s Advisory segment in April 2017 and is now the Chief Executive Officer of Consulting. Prior to Korn Ferry, Mr.
Rozek held senior leadership positions at Eastman Kodak, and spent five years as a Partner with PricewaterhouseCoopers LLP. Mr.
Rozek held senior leadership positions at Eastman Kodak, and spent five years as a Partner with PricewaterhouseCoopers LLP. Mr. Rozek is a graduate of Canisius College in New York with a bachelor’s degree in accounting.
Mulrooney is a graduate of Villanova University in Pennsylvania. He holds a master’s degree in management from Northwestern University’s J.L. Kellogg Graduate School of Management. Michael Distefano has been the Chief Executive Officer, Professional Search and President of Search Innovation and Delivery Team since December 2020. Mr.
Kellogg Graduate School of Management. 24 Michael Distefano has been the Chief Executive Officer of Professional Search & Interim and President of Search Innovation and Delivery Team since December 2020. Mr.
Byrne Mulrooney joined the Company in April 2010 as Chief Executive Officer of RPO & Professional Search and in March 2017 also became the Chief Executive Officer of Digital. Prior to joining Korn Ferry, he was President and Chief Operating Officer of Flynn Transportation Services, a third-party logistics company, from 2007 to 2010.
Byrne Mulrooney joined the Company in April 2010 as Chief Executive Officer of RPO & Professional Search and in March 2017 also became the Chief Executive Officer of Digital. He is now the Chief Executive Officer of RPO and Digital.
Rozek 61 Executive Vice President, Chief Financial Officer and Chief Corporate Officer Mark Arian 61 Chief Executive Officer, Consulting Byrne Mulrooney 61 Chief Executive Officer, RPO Professional Search & Digital Michael Distefano (1) 52 Chief Executive Officer, Professional Search (1) Appointed as an executive officer on June 15, 2022 under Rule 3b-7.
Rozek 62 Executive Vice President, Chief Financial Officer and Chief Corporate Officer Mark Arian 62 Chief Executive Officer, Consulting Byrne Mulrooney 62 Chief Executive Officer, RPO & Digital Michael Distefano 53 Chief Executive Officer, Professional Search & Interim Our executive officers serve at the discretion of our Board of Directors.
Added
Mulrooney held executive positions for almost 20 years at EDS and IBM in client services, sales, marketing and operations. Mr. Mulrooney is a graduate of Villanova University in Pennsylvania. He holds a master’s degree in management from Northwestern University’s J.L.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table summarizes common stock repurchased by us during the fourth quarter of fiscal 2022: Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly- Announced Programs Approximate Dollar Value of Shares that May Yet be Purchased under the Programs (2) February 1, 2022 — February 28, 2022 240,000 $ 66.68 240,000 $80.4 Million March 1, 2022 — March 31, 2022 453,182 $ 64.10 450,000 $51.5 Million April 1, 2022 — April 30, 2022 346,698 $ 64.82 345,402 $29.1 Million Total 1,039,880 $ 64.94 1,035,402 (1) Represents withholding of 4,478 of restricted shares to cover taxes on vested restricted shares.
Biggest changeIssuer Purchases of Equity Securities The following table summarizes common stock repurchased by us during the fourth quarter of fiscal 2023: Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly- Announced Programs Approximate Dollar Value of Shares that May Yet be Purchased under the Programs (2) February 1, 2023 - February 28, 2023 95,000 $ 56.35 95,000 $243.3 million March 1, 2023 - March 31, 2023 76,699 $ 53.09 75,000 $239.3 million April 1, 2023 - April 30, 2023 85,000 $ 48.12 85,000 $235.2 million Total 256,699 $ 52.65 255,000 _______________________________ (1) Represents withholding of 1,699 shares to cover taxes on vested restricted shares, in addition to shares purchased as part of a publicly announced program.
Next, the Company’s capital allocation approach contemplates the planned return of a portion of excess capital to stockholders, in the form of a regular quarterly dividend, subject to the factors discussed below under “Dividends” and in more detail in the “Risk Factors” section of this Annual Report on Form 10-K.
Next, the Company’s capital allocation approach contemplates the return of a 26 portion of excess capital to stockholders, in the form of a regular quarterly dividend, subject to the factors discussed below under “Dividends” and in more detail in the “Risk Factors” section of this Annual Report on Form 10-K.
The Board of Directors may amend, revoke or suspend the dividend policy at any time and for any reason.
The Board of Directors may, however, amend, revoke or suspend the dividend policy at any time and for any reason.
Cumulative total return for each of the periods shown in the performance graph is measured assuming an initial investment of $100 on April 30, 2017 and the reinvestment of any dividends paid by the Company and any company in the peer group on the date the dividends were paid.
Cumulative total return for each of the periods shown in the performance graph is measured assuming an initial investment of $100 on April 30, 2018 and the reinvestment of any dividends paid by the Company and any company in the peer group on the date the dividends were paid.
(2) On June 21, 2022, our Board of Directors approved an increase to the share repurchase program to an aggregate of $318 million. The shares can be repurchased in open market transactions or privately negotiated transactions at the Company’s discretion. The share repurchase program has no expiration date.
(2) On June 21, 2022, our Board of Directors approved an increase to the share repurchase program of $300 million. The shares can be repurchased in open market transactions or privately negotiated transactions at the Company's discretion. The share repurchase program has no expiration date.
Dividends On December 8, 2014, the Board of Directors adopted a dividend policy, reflecting an intention to distribute to our stockholders a regular quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend.
Dividends On December 8, 2014, the Board of Directors adopted a dividend policy to distribute to our stockholders a regular quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend.
Common stock may be repurchased from time to time in open market or privately negotiated transactions at the Company’s discretion subject to market conditions and other factors. The Company repurchased approximately $98.8 million, $30.4 million and $92.4 million of the Company’s common stock during fiscal 2022, 2021 and 2020, respectively.
Common stock may be repurchased from time to time in open market or privately negotiated transactions at the Company’s discretion subject to market conditions and other factors. The Company repurchased approximately $93.9 million, $98.8 million and $30.4 million of the Company’s common stock during fiscal 2023, 2022 and 2021, respectively.
The Company’s first priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services, and the investment in synergistic, accretive M&A transactions that earn a return superior to the Company's cost of capital.
The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services, and the investment in synergistic, accretive M&A transactions that are expected to earn a return superior to the Company's cost of capital.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN ( *) Among Korn Ferry, the S&P 500 Index, 2021 Peer Group and 2022 Peer Group Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved. (*) $100 invested on April 30, 2017 in stock or index, including reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN (*) Among Korn Ferry, the S&P 500 Index, and a Peer Group Copyright© 2023 Standard & Poor's, a division of S&P Global. All rights reserved. _______________________________ (*) $100 invested on April 30, 2018 in stock or index, including reinvestment of dividends. Fiscal year ended April 30, 2023.
Performance Graph We have presented below a graph comparing the cumulative total stockholder return of the Company’s shares with the cumulative total stockholder return on (1) the Standard & Poor’s 500 Stock Index and (2) the company-established peer groups for both 2022 and 2021.
Performance Graph We have presented below a graph comparing the cumulative total stockholder return of the Company’s shares with the cumulative total stockholder return on (1) the Standard & Poor’s 500 Stock Index and (2) the company-established peer group.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Our common stock is listed on the New York Stock Exchange under the symbol KFY. On June 21, 2022, there were approximately 46,937 stockholders of record of the Company’s common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Our common stock is listed on the New York Stock Exchange under the symbol KFY. On June 22, 2023, there were approximately 38,078 stockholders of record of the Company’s common stock.
Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our indebtedness. See Note 11— Long Term Debt for a description of the Credit Agreement and indenture governing the Notes and Note 18 — Subsequent Events – Credit Facility for a description of the Amended Credit Agreement.
Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our indebtedness, as well as using excess cash to repay the Notes. See Note 11— Long Term Debt for a description of the Amended Credit Agreement and indenture governing the Notes.
In fiscal 2022, we established a new peer group comprised of a broad number of publicly traded companies, which are principally or in significant part involved in either professional staffing or consulting. The peer group is comprised of the following 11 companies: ASGN Inc. (ASGN), Cushman & Wakefield Plc. (CWK), FTI Consulting Inc. (FCN), Heidrick & Struggles International Inc.
Our peer group is comprised of a broad number of publicly traded companies, which are principally or in significant part involved in professional services. The peer group is comprised of the following 11 companies: ASGN Inc. (ASGN), Cushman & Wakefield Plc. (CWK), FTI Consulting Inc. (FCN), Heidrick & Struggles International Inc. (HSII), Huron Consulting Group Inc. (HURN), ICF International Inc.
We believe this group of professional services firms is reflective of similar sized companies in terms of our market capitalization, with significant global exposure that mirrors our global footprint and therefore provides a more meaningful comparison of stock performance.
(ICFI), Insperity Inc. (NSP), Jones Lang Lasalle Inc. (JLL), ManpowerGroup Inc. (MAN), PageGroup Plc. (MPGPF) and Robert Half International Inc. (RHI). We believe this group of professional services firms is reflective of similar sized companies in terms of our market capitalization, with significant global exposure that mirrors our global footprint and therefore provides a meaningful comparison of stock performance.
On June 21, 2021, the Board of Directors increased the quarterly dividends to $0.12 per share for fiscal 2021. On June 21, 2022, the Board of Directors approved a 25% increase to our quarterly dividends to $0.15 per share.
On June 21, 2021 and 2022, the Board of Directors increased the quarterly dividend to $0.12 per share and $0.15 per share, respectively. On June 26, 2023, the Board of Directors of the Company approved an increase of 20% in our quarterly dividend, which increased the quarterly dividend to $0.18 per share.
Fiscal year ended April 30, 2022. 26 Capital Allocation Approach The Company and its Board of Directors endorse a balanced approach to capital allocation that contemplates debt service cost.
Capital Allocation Approach The Company and its Board of Directors endorse a balanced approach to capital allocation.
The returns of each company have been weighted according to their respective stock market capitalization at the beginning of each measurement period for purposes of arriving at a peer group average. The 2021 peer group, presented for comparative purposes, consisted of Heidrick & Struggles International Inc. (HSII), Robert Half International Inc, (RHI), Willis Towers Watson Plc, (WLTW), Kforce Inc.
The returns of each company have been weighted according to their respective stock market capitalization at the beginning of each measurement period for purposes of arriving at a peer group average. The stock price performance depicted in this graph is not necessarily indicative of future price performance.
Removed
(HSII), Huron Consulting Group Inc. (HURN), ICF International Inc. (ICFI), Insperity Inc. (NSP), Jones Lang Lasalle Inc. (JLL), ManpowerGroup Inc. (MAN), PageGroup Plc. (MPGPF) and Robert Half International Inc. (RHI).
Added
We repurchased approximately $13.4 million of the Company's common stock under the program during the fourth quarter of fiscal 2023.
Removed
(KFRC), Kelly Services Inc. (KELYA), TrueBlue Inc. (TBI), Insperity Inc. (NSP), FTI Consulting Inc. (FCN), CBIZ Inc. (CBZ), ICF International Inc. (ICFI), Huron Consulting Group Inc, (HURN) and Resources Connection Inc. (RGP). The stock price performance depicted in this graph is not necessarily indicative of future price performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

117 edited+140 added−21 removed101 unchanged
Biggest changeThese figures are non-GAAP financial measures and are presented as they are consistent with the Company’s lines of business and are financial metrics used by the Company’s investor base. 33 Year Ended April 30, 2022 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 650,204 $ 349,025 $ 605,704 $ 182,192 $ 118,596 $ 29,069 $ 935,561 $ 691,928 $ — $ 2,626,718 Total revenue $ 654,199 $ 349,437 $ 609,258 $ 182,866 $ 118,705 $ 29,079 $ 939,908 $ 699,911 $ — $ 2,643,455 Net income attributable to Korn Ferry $ 326,360 Net income attributable to noncontrolling interest 4,485 Other loss, net 11,880 Interest expense, net 25,293 Income tax provision 102,056 Operating income $ 470,074 Depreciation and amortization 63,521 Other loss, net (11,880 ) Integration/acquisition costs 7,906 Impairment of fixed assets 1,915 Impairment of right of use assets 7,392 Adjusted EBITDA $ 116,108 $ 110,050 $ 181,615 $ 31,804 $ 35,105 $ 9,089 $ 257,613 $ 165,141 $ (109,984 ) $ 538,928 Adjusted EBITDA margin 17.9 % 31.5 % 30.0 % 17.5 % 29.6 % 31.3 % 27.5 % 23.9 % 20.5 % Year Ended April 30, 2021 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 515,844 $ 287,306 $ 397,275 $ 138,954 $ 83,306 $ 17,500 $ 637,035 $ 369,862 $ — $ 1,810,047 Total revenue $ 517,046 $ 287,780 $ 399,104 $ 139,213 $ 83,463 $ 17,500 $ 639,280 $ 375,840 $ — $ 1,819,946 Net income attributable to Korn Ferry $ 114,454 Net income attributable to noncontrolling interest 1,108 Other income, net (37,194 ) Interest expense, net 29,278 Income tax provision 48,138 Operating income $ 155,784 Depreciation and amortization 61,845 Other income, net 37,194 Integration/acquisition costs 737 Restructuring charges, net 30,732 Adjusted EBITDA $ 81,522 $ 86,095 $ 98,099 $ 11,742 $ 16,676 $ 1,289 $ 127,806 $ 69,411 $ (78,542 ) $ 286,292 Adjusted EBITDA margin 15.8 % 30.0 % 24.7 % 8.5 % 20.0 % 7.4 % 20.1 % 18.8 % 15.8 % Year Ended April 30, 2020 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 543,095 $ 292,366 $ 434,624 $ 170,314 $ 98,132 $ 29,400 $ 732,470 $ 364,801 $ — $ 1,932,732 Total revenue $ 557,255 $ 294,261 $ 447,528 $ 172,978 $ 99,209 $ 29,493 $ 749,208 $ 376,606 $ — $ 1,977,330 Net income attributable to Korn Ferry $ 104,946 Net income attributable to noncontrolling interest 2,071 Other loss, net 2,879 Interest expense, net 22,184 Income tax provision 43,945 Operating income $ 176,025 Depreciation and amortization 55,311 Other loss, net (2,879 ) Integration/acquisition costs 12,152 Restructuring charges, net 58,559 Separation costs 1,783 Adjusted EBITDA $ 61,092 $ 83,073 $ 120,725 $ 31,067 $ 22,885 $ 6,402 $ 181,079 $ 60,168 $ (84,461 ) $ 300,951 Adjusted EBITDA margin 11.2 % 28.4 % 27.8 % 18.2 % 23.3 % 21.8 % 24.7 % 16.5 % 15.6 % 34 Fiscal 2022 Compared to Fiscal 2021 Fee Revenue Fee Revenue.
Biggest changeThese figures are non-GAAP financial measures and are presented as they are consistent with the Company’s lines of business and are financial metrics used by the Company’s investor base. 33 Year Ended April 30, 2023 2022 2021 Consolidated (in thousands) Fee revenue $ 2,835,408 $ 2,626,718 $ 1,810,047 Total revenue $ 2,863,836 $ 2,643,455 $ 1,819,946 Net income attributable to Korn Ferry $ 209,529 $ 326,360 $ 114,454 Net income attributable to noncontrolling interest 3,525 4,485 1,108 Other (income) loss, net (5,261) 11,880 (37,194) Interest expense, net 25,864 25,293 29,278 Income tax provision 82,683 102,056 48,138 Operating income 316,340 470,074 155,784 Depreciation and amortization 68,335 63,521 61,845 Other income (loss), net 5,261 (11,880) 37,194 Integration/acquisition costs 14,922 7,906 737 Impairment of fixed assets 4,375 1,915 — Impairment of right of use assets 5,471 7,392 — Restructuring charges, net 42,573 — 30,732 Adjusted EBITDA $ 457,277 $ 538,928 $ 286,292 Adjusted EBITDA margin 16.1 % 20.5 % 15.8 % Year Ended April 30, 2023 Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin (dollars in thousands) Consulting $ 677,001 $ 686,979 $ 108,502 16.0 % Digital 354,651 354,967 97,458 27.5 % Executive Search: North America 562,139 568,212 140,850 25.1 % EMEA 187,014 188,114 31,380 16.8 % Asia Pacific 95,598 95,956 24,222 25.3 % Latin America 31,047 31,054 9,370 30.2 % Total Executive Search 875,798 883,336 205,822 23.5 % Professional Search & Interim 503,395 507,058 110,879 22.0 % RPO 424,563 431,496 52,588 12.4 % Corporate — — (117,972) Consolidated $ 2,835,408 $ 2,863,836 $ 457,277 16.1 % 34 Year Ended April 30, 2022 Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin (dollars in thousands) Consulting $ 650,204 $ 654,199 $ 116,108 17.9 % Digital 349,025 349,437 110,050 31.5 % Executive Search: North America 605,704 609,258 181,615 30.0 % EMEA 182,192 182,866 31,804 17.5 % Asia Pacific 118,596 118,705 35,105 29.6 % Latin America 29,069 29,079 9,089 31.3 % Total Executive Search 935,561 939,908 257,613 27.5 % Professional Search & Interim 297,096 297,974 106,015 35.7 % RPO 394,832 401,937 59,126 15.0 % Corporate — — (109,984) Consolidated $ 2,626,718 $ 2,643,455 $ 538,928 20.5 % Year Ended April 30, 2021 Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin (dollars in thousands) Consulting $ 515,844 $ 517,046 $ 81,522 15.8 % Digital 287,306 287,780 86,095 30.0 % Executive Search: North America 397,275 399,104 98,099 24.7 % EMEA 138,954 139,213 11,742 8.5 % Asia Pacific 83,306 83,463 16,676 20.0 % Latin America 17,500 17,500 1,289 7.4 % Total Executive Search 637,035 639,280 127,806 20.1 % Professional Search & Interim 130,831 131,080 36,934 28.2 % RPO 239,031 244,760 32,477 13.6 % Corporate — — (78,542) Consolidated $ 1,810,047 $ 1,819,946 $ 286,292 15.8 % Fiscal 2023 Compared to Fiscal 2022 Fee Revenue Fee Revenue.
Each quarter, management makes its best estimate of its annual performance-related bonuses, which requires management to, among other things, project annual consultant productivity (as measured by engagement fees billed and collected by executive search consultants and revenue and other performance/profitability metrics for Consulting, Digital and RPO & Professional Search consultants), the level of engagements referred by a consultant in one line of business to a different line of business, our performance including profitability, competitive forces and future economic conditions and their impact on our results.
Each quarter, management makes its best estimate of its annual performance-related bonuses, which requires management to, among other things, project annual consultant productivity (as measured by engagement fees billed and collected by Executive Search and Professional Search consultants and revenue and other performance/profitability metrics for Consulting, Digital, Interim and RPO consultants), the level of engagements referred by a consultant in one line of business to a different line of business, our performance, including profitability, competitive forces and future economic conditions and their impact on our results.
Revenue for tangible and digital products sold by the Company, such as books and digital files, is recognized when these products are shipped. Fee revenue from Executive Search and Professional Search activities is generally one-third of the estimated first year compensation of the placed candidate plus a percentage of the fee to cover indirect engagement related expenses.
Revenue for tangible and digital products sold by the Company, such as books and digital files, is recognized when these products are shipped. Fee revenue from executive and professional search activities is generally one-third of the estimated first-year cash compensation of the placed candidate, plus a percentage of the fee to cover indirect engagement-related expenses.
Because annual performance-based bonuses are communicated and paid only after we report our full fiscal year results, actual performance-based bonus payments may differ from the prior year’s estimate. Such changes in the bonus estimate historically have been immaterial and are recorded in current operations in the period in which they are determined. Deferred Compensation .
Because annual performance-based bonuses are communicated and paid only after we report our full fiscal year results, actual performance-based bonus payments may differ from the prior year’s estimate. Such changes in the bonus estimate historically have been immaterial and are recorded in current operations in the period in which they are determined. 31 Deferred Compensation .
Executive Search EMEA Adjusted EBITDA increased by $20.1 million, or 172%, to $31.8 million in fiscal 2022 compared to $11.7 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense and general and administrative expenses (excluding impairment charges).
Executive Search EMEA Adjusted EBITDA increased by $20.1 million, or 172%, to $31.8 million in fiscal 2022 compared to $11.7 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially 44 offset by increases in compensation and benefits expense and general and administrative expenses (excluding impairment charges).
In preparing our consolidated financial statements and accounting for the underlying transactions and balances, we apply our accounting policies as disclosed in the notes to our consolidated financial statements. We consider the policies discussed below as critical to an understanding of our consolidated financial statements because their application places the most significant demands on management’s judgment and estimates.
In preparing our consolidated financial statements and accounting for the underlying transactions and balances, we apply our accounting policies as disclosed in the notes to our 30 consolidated financial statements. We consider the policies discussed below as critical to an understanding of our consolidated financial statements because their application places the most significant demands on management’s judgment and estimates.
Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, decreased to 61% in fiscal 2022 from 70% in fiscal 2021. 36 Executive Search Latin America compensation and benefits expense increased by $4.3 million, or 30% , to $18.4 million in fiscal 2022 compared to $14.1 million in fiscal 2021 .
Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, decreased to 61% in fiscal 2022 from 70% in fiscal 2021. Executive Search Latin America compensation and benefits expense increased by $4.3 million, or 30%, to $18.4 million in fiscal 2022 compared to $14.1 million in fiscal 2021.
Substantially all fee revenue is derived from talent and organizational consulting services and digital sales, stand-alone or as part of a solution, fees for professional services related to executive and professional recruitment performed on a retained basis and RPO, either stand-alone or as part of a solution.
Substantially all fee revenue is derived from talent and organizational consulting services and digital sales, stand-alone or as part of a solution, fees for professional services related to executive and professional recruitment performed on a retained basis, interim services and RPO, either stand-alone or as part of a solution.
Estimating deferred compensation requires assumptions regarding the timing and probability of payments of benefits to participants and the discount rate. Changes in these assumptions could 31 significantly impact the liability and related cost on our consolidated balance sheets and statements of income, respectively.
Estimating deferred compensation requires assumptions regarding the timing and probability of payments of benefits to participants and the discount rate. Changes in these assumptions could significantly impact the liability and related cost on our consolidated balance sheets and statements of income, respectively.
The increase in general and administrative expenses was primarily due to higher bad debt expense of $1.0 million in fiscal 2022 compared to fiscal 2021. Executive Search 37 Asia Pacific general and administrative expenses, as a percentage of fee revenue , was 9% in fiscal 2022 compared to 10% in fiscal 2021 .
The increase in general and administrative expenses was primarily due to higher bad debt expense of $1.0 million in fiscal 2022 compared to fiscal 2021. Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue, was 9% in fiscal 2022 compared to 10% in fiscal 2021.
The in crease was primarily due to higher salaries and related payroll taxes of $2.0 million and performance-related bonus expense of $1.4 million in fiscal 2022 compared to fiscal 2021 due to an increase in fee revenue combined with an increase in overall profitability .
The increase was primarily due to higher salaries and related payroll taxes of $2.0 million and performance-related bonus expense of $1.4 million in fiscal 2022 compared to fiscal 2021 due to an increase in fee revenue combined with an increase in overall profitability.
Our approach to placing talent that brings together our research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for compensation and retention.
Our approach to placing talent brings together research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for compensation and retention.
Cost of Services Expense Cost of services expense consists primarily of contractor and product costs related to the delivery of various services and products, primarily in RPO & Professional Search, Consulting and Digital. Cost of services expense was $114.4 million in fiscal 2022 compared to $72.0 million in fiscal 2021.
Cost of Services Expense Cost of services expense consists primarily of contractor and product costs related to the delivery of various services and products, primarily in Professional Search & Interim, Consulting, Digital and RPO. Cost of services expense was $114.4 million in fiscal 2022 compared to $72.0 million in fiscal 2021.
Specific risks for these critical 30 accounting policies are described in the following paragraphs. Senior management has discussed the development, selection and key assumptions of the critical accounting estimates with the Audit Committee of the Board of Directors. Revenue Recognition .
Specific risks for these critical accounting policies are described in the following paragraphs. Senior management has discussed the development, selection and key assumptions of the critical accounting estimates with the Audit Committee of the Board of Directors. Revenue Recognition .
The increase in Adjusted EBITDA was mainly driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs), cost of services expense, and general and administrative expenses (excluding impairment charges and integration and acquisition costs).
The increase in Adjusted EBITDA was mainly driven by higher fee revenue, partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs), cost of services expense and general and administrative expenses (excluding impairment charges and integration and acquisition costs).
The obligations related to these employee benefit plans 42 are described in Note 6— Deferred Compensation and Retirement Plans , in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K.
The obligations related to these employee benefit plans are described in Note 6— Deferred Compensation and Retirement Plans , in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K.
Recently Proposed Accounting Standards - Not Yet Adopted In October 2021, the FASB issued an amendment in accounting for contract assets and contract liabilities from contracts with customers, which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC 606, Revenue from Contracts with Customers .
Accounting Developments Recently Proposed Accounting Standards - Not Yet Adopted In October 2021, the FASB issued an amendment in accounting for contract assets and contract liabilities from contracts with customers, which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Accounting Standards Codification ("ASC 606"), Revenue from Contracts with Customers .
They should not be viewed as a substitute for financial information determined in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP ” ) and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.
They should not be viewed as a substitute for financial information determined in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.
The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services, and the investment in synergistic, accretive merger and acquisition transactions that earn a return that is superior to the Company's cost of capital.
The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services and the investment in synergistic, accretive merger and acquisition transactions that are expected to earn a return that is superior to the Company's cost of capital.
We perform an annual impairment test each year as of January 31, or more frequently if impairment indicators arise. The qualitative test performed as of January 31, 2022 did not indicate any impairment, and therefore there was no need to perform a quantitative test.
We perform an annual impairment test each year as of January 31, or more frequently if impairment indicators arise. The qualitative test performed as of January 31, 2023 did not indicate any impairment, and therefore there was no need to perform a quantitative test.
Executive Search Latin America Adjusted EBITDA increased by $7.8 million to $9.1 million in fiscal 2022 compared to $1.3 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by an increase in compensation and benefit expense.
Executive Search Latin America Adjusted EBITDA increased by $7.8 million to $9.1 million in fiscal 2022 compared to $1.3 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by an increase in compensation and benefits expense.
In a standard search engagement, there is one performance obligation which is the promise to undertake a search. We generally recognize such revenue over the course of a search and when it is legally entitled to payment as outlined in the billing terms of the contract.
In a standard search engagement, there is one performance obligation, which is the promise to undertake a search. We generally recognize such revenue over the course of a search and when we are legally entitled to payment as outlined in the billing terms of the contract.
We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop and motivate their people. We are pursuing a strategy that will help Korn Ferry to focus on clients and collaborate intensively across the organization.
We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop and motivate their people. We are pursuing a strategy to help Korn Ferry focus on clients and collaborate intensively across the organization.
We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit facility (the “Prior Credit Agreement”) and to pay expenses and fees in connection therewith.
We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit facility and to pay expenses and fees in connection therewith.
For fiscal 2022, Adjusted EBITDA excluded $7.9 million of integration/acquisition costs, a $7.4 million impairment of right-of-use assets and a $1.9 million impairment of fixed assets. For fiscal 2021, Adjusted EBITDA excluded $30.7 million of restructuring charges and $0.7 million of integration/acquisition costs.
For fiscal 2022, Adjusted EBITDA excluded $7.9 million of integration/acquisition costs, $7.4 million impairment of right-of-use assets and $1.9 million impairment of fixed assets. For fiscal 2021, Adjusted EBITDA excluded $30.7 million of restructuring charges, net and $0.7 million of integration/acquisition costs.
The performance in Mexico, Brazil and Chile were the primary contributors to the increase in fee revenue in fiscal 2022 compared to fiscal 2021, driving $9.4 million of increased revenue. RPO & Professional Search.
The performance in Mexico, Brazil and Chile were the primary contributors to the increase in fee revenue in fiscal 2022 compared to fiscal 2021, driving $9.4 million of increased revenue. Professional Search & Interim .
Revenue contracts with customers are evaluated based on the five-step model outlined in Accounting Standard Codification 606 (“ASC 606”), Revenue from Contracts with Customers: 1) identify the contract with a customer; 2) identify the performance obligation(s) in the contract; 3) determine the transaction price; 4) allocate the transaction price to the separate performance obligation(s); and 5) recognize revenue when (or as) each performance obligation is satisfied.
Revenue contracts with customers are evaluated based on the five-step model outlined in Accounting Standard Codification (“ASC”) 606 ("ASC 606"), Revenue from Contracts with Customers: 1) identify the contract with a customer; 2) identify the performance obligation(s) in the contract; 3) determine the transaction price; 4) allocate the transaction price to the separate performance obligation(s); and 5) recognize revenue when (or as) each performance obligation is satisfied.
The increases in compensation and benefit expense was partially offset by a decrease in the amounts owed under certain deferred compensation and retirement plans $35.4 million due to a decrease in the fair market value of the participants’ accounts in fiscal 2022 compared to fiscal 2021.
The increases in compensation and benefits expense was partially offset by a decrease in the amounts owed under certain deferred compensation and retirement plans of $35.4 million due to a decrease in the fair market value of the participants accounts in fiscal 2022 compared to fiscal 2021.
We have evolved from a mono-line business to a multi-faceted consultancy business, giving our consultants more frequent and expanded opportunities to engage with clients. Our seven reportable segments operate through the following four lines of business: 1.
We have evolved from a mono-line business to a multi-faceted consultancy business, giving our consultants more frequent and expanded opportunities to engage with clients. Our eight reportable segments operate through the following five lines of business: 1.
There was no indication of potential impairment through April 30, 2022 that would have required further testing.
There was no indication of potential impairment through April 30, 2023 that would have required further testing.
Total death benefits payable, net of loans under COLI contracts, were $449.3 million and $443.9 million at April 30, 2022 and 2021, respectively. Other than the factors discussed in this section, we are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources as of April 30, 2022.
Total death benefits payable, net of loans under COLI contracts, were $444.1 million and $449.3 million at April 30, 2023 and 2022, respectively. Other than the factors discussed in this section, we are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources as of April 30, 2023.
Also contributing to higher compensation and benefit expense was an increase in commission expense of $28.5 million due to the Acquisitions, partially offset by a decrease in deferred compensation expenses of $30.7 million as a result of decreases in the fair value of participants’ accounts in fiscal 2022 compared to fiscal 2021.
Also contributing to higher compensation and benefits expense was an increase in commission expense of $28.5 million due to the Acquired Companies in fiscal 2022, partially offset by a decrease in deferred compensation expenses of $30.7 million as a result of decreases in the fair value of participants’ accounts in fiscal 2022 compared to fiscal 2021.
The increase in general and administrative expenses was primarily due to higher marketing expense of $7.2 million, integration and acquisition costs of $4.2 million incurred with the Acquisitions in fiscal 2022, legal and other professional fees of $3.8 million and an increase of $1.5 million in charitable contributions in fiscal 2022 compared to fiscal 2021.
The increase in general and administrative expenses was primarily due to higher marketing expense of $7.2 million, integration and acquisition costs of $4.2 million due to the acquisition of the Acquired Companies in fiscal 2022, legal and other professional fees of $3.8 million and an increase of $1.5 million in charitable contributions in fiscal 2022 compared to fiscal 2021.
Such borrowings do not require annual principal repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts. At April 30, 2022 and 2021, the net cash value of these policies was $183.3 million and $161.3 million, respectively.
Such borrowings do not require annual principal repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts. At April 30, 2023 and 2022, the net cash value of these policies was $198.0 million and $183.3 million, respectively.
This approach builds on the best of our past and gives us a clear path to the future with focused initiatives to increase our client and commercial impact. Korn Ferry is transforming how clients address their talent management needs.
This approach is intended to build on the best of our past and give us a clear path to the future with focused initiatives to increase our client and commercial impact. Korn Ferry is transforming how clients address their talent management needs.
The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to the ultimate magnitude and duration of COVID-19 and of any future pandemics or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to provide services in affected regions, global and local political and or economic developments in or affecting countries where we have operations, competition, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, inflationary pressures maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions, our indebtedness, the phase-out of LIBOR, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A included in this Annual Report on Form 10-K.
The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of recent workforce, real estate, and other restructuring initiatives, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate acquired businesses, including Infinity Consulting Solutions ("ICS") and Salo LLC ("Salo"), resulting organizational changes, our indebtedness, the ultimate magnitude and duration of any future pandemics or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to provide services in affected regions, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A included in this Annual Report on Form 10-K.
Highlights of our performance in fiscal 2022 include: ▪ Approximately 76% of the executive searches we performed in fiscal 2022 were for board level, chief executive and other senior executive and general management positions.
Highlights of our performance in fiscal 2023 include: ▪ Approximately 78% of the executive searches we performed in fiscal 2023 were for board level, chief executive and other senior executive and general management positions.
The increase in general and administrative expenses was primarily due to an increase in premise and office expense $5.3 million, higher bad debt expense of $3.7 million, impairment charges associated with the reduction of the Company’s real estate footprint of $3.9 million and integration and acquisition costs associated with the Acquisitions of $1.8 million.
The increase in general and administrative expenses was primarily due to an increase in premise and office expense of $4.4 million, impairment charges associated with the reduction of the Company's real estate footprint of $2.3 million, higher bad debt expense of $2.1 million, and integration and acquisition costs of $1.8 million.
(2) Assumes COLI loans remain outstanding until receipt of death benefits on COLI policies and applies current interest rates on COLI loans ranging from 4.76% to 8.00% with total death benefits payable, net of loans under COLI contracts of $449.3 million at April 30, 2022.
(2) Assumes COLI loans remain outstanding until receipt of death benefits on COLI policies and applies current interest rates on COLI loans ranging from 4.76% to 8.00% with total death benefits payable, net of loans under COLI contracts of $444.1 million at April 30, 2023.
The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint of $2.8 million in fiscal 2022. Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 8% in fiscal 2022 from 9% in fiscal 2021.
The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint of $1.5 million in fiscal 2022. Digital general and administrative expenses, as a percentage of fee revenue, decreased to 9% in fiscal 2022 from 10% in fiscal 2021.
The increase was primarily due to the technology investments made in the current and prior year in software for our Digital business and the Acquisitions. Restructuring Charges, Net There were no restructuring charges, net during fiscal 2022.
The increase was primarily due to technology investments made in the current and prior year in software for our Digital business and the Acquired Companies in fiscal 2022 in the Professional Search & Interim segment. Restructuring Charges, Net There were no restructuring charges, net during fiscal 2022.
Cash and cash equivalents and marketable securities were $1,211.1 million and $1,097.1 million as of April 30, 2022 and 2021, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and cash equivalents and marketable securities were $605.4 million and $642.1 million at April 30, 2022 and 2021, respectively.
Cash and cash equivalents and marketable securities were $1,067.9 million and $1,211.1 million as of April 30, 2023 and 2022, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and cash equivalents and marketable securities were $488.2 million and $605.4 million at April 30, 2023 and 2022, respectively.
As of April 30, 2022, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $164.2 million and a fair value of $168.7 million. Our vested obligations for which these assets were held in trust totaled $160.8 million as of April 30, 2022 and our unvested obligations totaled $24.0 million.
As of April 30, 2023, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $187.0 million and a fair value of $187.8 million. Our vested obligations for which these assets were held in trust totaled $172.2 million as of April 30, 2023 and our unvested obligations totaled $21.9 million.
Our working capital increased by $38.6 million to $775.7 million in fiscal 2022. We believe that cash on hand and funds from operations and other forms of liquidity will be sufficient to meet our anticipated working capital, capital expenditures, general corporate requirements, repayment of our debt obligations and dividend payments under our dividend policy in the next twelve months.
We believe that cash on hand and funds from operations and other forms of liquidity will be sufficient to meet our anticipated working capital, capital expenditures, general corporate requirements, repayment of our debt obligations and dividend payments under our dividend policy in the next 12 months.
The Amended Credit Agreement provides for five-year senior secured credit facilities in an aggregate amount of $1,150 million comprised of a $650.0 million revolving credit facility and a $500 million delayed draw term loan facility.
The Amended Credit Agreement provides for five-year senior secured credit facilities in an aggregate amount of $1,150 million comprised of a $650.0 million revolving credit facility (the "Revolver") and a $500 million delayed draw term loan facility with the delayed draw having an expiration date of June 23, 2023 (the "Delayed Draw Facility", and together with the Revolver, the "Credit Facilities").
T he increase in Professional Search is due to an 86 % increase in engagements billed and a 21 % increase in the weighted-average fees billed per engagement in fiscal 2022 compared to fiscal 2021.
The increase in Professional Search & Interim fee revenue was due to an 86% increase in engagements billed and a 21% increase in the weighted-average fees billed per engagement in fiscal 2022 compared to fiscal 2021.
The increase was due to higher salaries and related payroll taxes of $122.1 million, performance-related bonus expense of $17.6 million, employer insurance of $8.4 million and the use of outside contractors of $5.0 million due to the increase in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021.
The increase was due to higher salaries and related payroll taxes of $23.0 million, performance-related bonus of $14.7 million, employer insurance of $2.7 million and the use of outside contractors of $0.8 million due to the increase in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021.
As of April 30, 2022 and 2021, we held contracts with gross cash surrender value (“CSV”) of $263.2 million and $241.3 million, respectively. Total outstanding borrowings against the CSV of COLI contracts were $79.8 million and $80.0 million as of April 30, 2022 and 2021, respectively.
As of April 30, 2023 and 2022, we held contracts with gross cash surrender value (“CSV”) of $275.1 million and $263.2 million, respectively. Total outstanding borrowings against the CSV of COLI contracts were $77.1 million and $79.8 million as of April 30, 2023 and 2022, respectively.
Consulting aligns organization structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Total Rewards. We support this work with a comprehensive range of some of the world’s leading lP and data.
Consulting aligns organizational structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Total Rewards. We enable this work with a comprehensive set of Digital Performance Management Tools, based on some of our world’s leading lP and data.
See Note 1 1 — Long-Term Debt for a description of the Credit Agreement.
See Note 11 — Long-Term Debt for a further description of the Amended Credit Agreement.
These marketable securities were held to satisfy vested obligations totaling $160.8 million and $ 1 57 . 3 million as of April 30, 2022 and 2021 , respectively. Unvested obligations under the deferred compensation plans totaled $24.0 million and $ 2 6 . 5 million as of April 30, 2022 and 2021 , respectively.
These marketable securities were held to satisfy vested obligations totaling $172.2 million and $160.8 million as of April 30, 2023 and 2022, respectively. Unvested obligations under the deferred compensation plans totaled $21.9 million and $24.0 million as of April 30, 2023 and 2022, respectively.
We are currently evaluating the impact of this accounting guidance but do not anticipate that it will have a material impact on the consolidated financial statements.
We do not anticipate that this accounting guidance will have a material impact on the consolidated financial statements.
On June 21, 2022, our Board of Directors approved an increase to the share repurchase program of approximately $300 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to $318 million.
Our Board of Directors may, however, amend, revoke or suspend our dividend policy at any time and for any reason. 46 On June 21, 2022, our Board of Directors approved an increase to the share repurchase program of approximately $300 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to $318 million.
Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our Amended Credit Agreement (defined below) as well as using excess cash to repay the Notes. On April 1, 2022, we completed the acquisition of Patina Solutions Group for $42.9 million, net of cash acquired.
Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our Amended Credit Agreement (defined below) and Notes, as well as using excess cash to repay the Notes. 45 On February 1, 2023, we completed the acquisition of Salo for $155.4 million, net of cash acquired.
Executive Search Latin America general and administrative expenses, as a percentage of fee revenue, was 3% in fiscal 2022 compared to 12% in fiscal 2021. RPO & Professional Search general and administrative expenses increased by $15.8 million, or 64%, to $40.6 million in fiscal 2022 from $24.8 million in fiscal 2021.
Executive Search Latin America general and administrative expenses, as a percentage of fee revenue, was 3% in fiscal 2022 compared to 12% in fiscal 2021. Professional Search & Interim general and administrative expenses increased by $12.2 million, or 153%, to $20.2 million in fiscal 2022 from $8.0 million in fiscal 2021.
The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the commercial paper, corporate notes/bonds and U.S.
Marketable securities consist of mutual funds and investments in commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities. The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities are available for general corporate purposes .
Digital general and administrative expenses increased by $1.9 million, or 7%, to $31.0 million in fiscal 2022 compared to $29.1 million in fiscal 2021. The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint of $1.5 million in fiscal 2022.
Consulting general and administrative expenses increased by $2.9 million, or 6%, to $51.5 million in fiscal 2022 compared to $48.6 million in fiscal 2021. The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint of $2.8 million in fiscal 2022.
Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 31% in fiscal 2022 compared to 7% in fiscal 2021. RPO & Professional Search Adjusted EBITDA was $165.1 million in fiscal 2022, an increase of $95.7 million, or 138%, compared to $69.4 million in fiscal 2021.
Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 31% in fiscal 2022 compared to 7% in fiscal 2021. Professional Search & Interim Adjusted EBITDA was $106.0 million in fiscal 2022, an increase of $69.1 million, or 187%, compared to $36.9 million in fiscal 2021.
Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved as this is when control is transferred to the customer. These assumptions determine the timing of revenue recognition for the reported period. RPO fee revenue is generated through two distinct phases: 1) the implementation phase and 2) the post-implementation recruitment phase.
Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved, as this is when control is transferred to the customer. These assumptions determine the timing of revenue recognition for the reported period.
Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, decreased to 63% in fiscal 2022 from 80% in fiscal 2021 . RPO & Professional Search compensation and benefits expense increased by $187.4 million, or 71%, to $452.0 million in fiscal 2022 from $264.6 million in fiscal 2021.
Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, decreased to 63% in fiscal 2022 from 80% in fiscal 2021. Professional Search & Interim compensation and benefits expense increased by $63.0 million, or 73%, to $148.8 million in fiscal 2022 from $85.8 million in fiscal 2021.
However, if the national or global economy, credit market conditions and/or labor markets were to deteriorate in the future, such changes could put negative pressure on demand for our services and affect our operating cash flows.
However, if the national or global economy, credit market conditions and/or labor markets were to deteriorate in the future, including as a result of ongoing macroeconomic uncertainty due to inflation and a potential recession, such changes have and could put further negative pressure on demand for our services and affect our operating cash flows.
Cash used in investing activities was $184.3 million in fiscal 2022 compared to $61.4 million in fiscal 2021.
Cash used in investing activities was $323.5 million in fiscal 2023 compared to $184.3 million in fiscal 2022.
The increase was due to an increase in fee revenue and the Acquisitions. Cost of services expense, as a percentage of fee revenue, was 4% in both fiscal 2022 and fiscal 2021. Depreciation and Amortization Expenses Depreciation and amortization expenses were $63.5 million in fiscal 2022, an increase of $1.7 million, or 3%, compared to $61.8 million in fiscal 2021.
Cost of services expense, as a percentage of fee revenue, increased to 8% in fiscal 2023 from 4% in fiscal 2022 due to the acquisition of the Acquired Companies. Depreciation and Amortization Expenses Depreciation and amortization expenses were $68.3 million in fiscal 2023, an increase of $4.8 million, or 8%, compared to $63.5 million in fiscal 2022.
The difference was primarily due to losses from the fair value of our marketable securities in fiscal 2022 compared to gains in fiscal 2021. Interest Expense, Net Interest expense, net primarily relates to our Notes issued in December 2019 and borrowings under our COLI policies, which are partially offset by interest earned on cash and cash equivalent balances.
Interest Expense, Net Interest expense, net primarily relates to our Notes issued in December 2019 and borrowings under our COLI policies, which are partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $25.3 million in fiscal 2022 compared to $29.3 million in fiscal 2021.
Digital general and administrative expenses, as a percentage of fee revenue, decreased to 9% in fiscal 2022 from 10% in fiscal 2021. Executive Search North America general and administrative expenses increased by $3.9 million, or 14%, to $30.8 million in fiscal 2022 from $26.9 million in fiscal 2021.
Digital general and administrative expenses, as a percentage of fee revenue, increased to 11% in fiscal 2023 from 9% in fiscal 2022. Executive Search North America general and administrative expenses increased by $1.6 million, or 5%, to $32.4 million in fiscal 2023 from $30.8 million in fiscal 2022.
As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be accurate predictions of the future. As of our testing date, the fair value of each reporting unit exceeded its carrying amount and as a result, no impairment charge was recognized.
As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be accurate predictions of the future. As of our testing date, there were no indicators of impairments that required us to perform a quantitative test and as a result, no impairment charge was recognized.
One June 24, 2022, we entered into an Amendment to the Credit Agreement (as amended by the Amendment, the “Amended Credit Agreement”) with the lenders party thereto and Bank of America, National Association as administrative agent, to, among other things, extend the existing maturity date and provide for a new delayed draw term loan facility.
On June 24, 2022, we entered into an amendment (the "Amendment") to our December 16, 2019 Credit Agreement (the "Credit Agreement"; as amended by the Amendment, the “Amended Credit Agreement”) with the lenders party thereto and Bank of America, National Association as administrative agent, to, among other things (i) extend the existing maturity date of the revolving facility to June 24, 2027, (ii) provide for a new delayed draw term loan facility as described below, (iii) replace the London interbank offered rate with Term SOFR, and (iv) replace the existing financial covenants with financial covenants described below.
Fee revenue increased by $816.7 million, or 45.1%, to $2,626.7 million in fiscal 2022 compared to $1,810.0 million in fiscal 2021. Exchange rates unfavorably impacted fee revenue by $2.8 million, in fiscal 2022 compared to fiscal 2021.
Fee revenue increased by $208.7 million, or 8.0%, to $2,835.4 million in fiscal 2023 compared to $2,626.7 million in fiscal 2022. Exchange rates unfavorably impacted fee revenue by $96.8 million, or 4%, in fiscal 2023 compared to fiscal 2022.
General and administrative expenses, as a percentage of fee revenue, decreased to 9% in fiscal 2022 from 11% in fiscal 2021. Consulting general and administrative expenses increased by $2.9 million, or 6%, to $51.5 million in fiscal 2022 compared to $48.6 million in fiscal 2021.
General and administrative expenses, as a percentage of fee revenue, was 9% in both fiscal 2023 and fiscal 2022. Consulting general and administrative expenses increased by $6.4 million, or 12%, to $57.9 million in fiscal 2023 compared to $51.5 million in fiscal 2022.
These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases.
These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals, including the timing and anticipated impacts of our restructuring plans and business strategy, are also forward-looking statements.
Consulting Adjusted EBITDA, as a percentage of fee revenue, was 18% in fiscal 2022 compared to 16% in fiscal 2021. 38 Digital A djusted EBITDA was $110.1 million in fiscal 2022 , an increase of $24.0 million, or 28% , compared to $86.1 million in fiscal 2021 .
These changes were partially offset by increases in compensation and benefits expense and cost of services expense. Consulting Adjusted EBITDA, as a percentage of fee revenue, was 18% in fiscal 2022 compared to 16% in fiscal 2021. Digital Adjusted EBITDA was $110.1 million in fiscal 2022, an increase of $24.0 million, or 28%, compared to $86.1 million in fiscal 2021.
This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, and Executive Search Latin America). 4. RPO and Professional Search focuses on delivering enterprise talent acquisition solutions to our clients, at the professional level.
This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa ("EMEA"), Executive Search Asia Pacific ("APAC"), and Executive Search Latin America). 4. Professional Search & Interim delivers enterprise talent acquisition solutions for professional level middle and upper management.
Executive Search EMEA general and administrative expenses increased by $2.0 million, or 13%, to $18.0 million in fiscal 2022 from $16.0 million in fiscal 2021.
Executive Search North America general and administrative expenses, as a percentage of fee revenue, was 5% in fiscal 2022 compared to 7% in fiscal 2021. Executive Search EMEA general and administrative expenses increased by $2.0 million, or 13%, to $18.0 million in fiscal 2022 from $16.0 million in fiscal 2021.
On June 21, 2022, the Board of Directors approved a 25% increase in the quarterly dividend, which increased the quarterly dividend to $0.15 per share.
On June 21, 2021 and 2022, the Board of Directors increased the quarterly dividend to $0.12 per share and $0.15 per share, respectively. On June 26, 2023, the Board of Directors approved an increase of 20% in the quarterly dividend, which increased the quarterly dividend to $0.18 per share.
The increase in general and administrative expenses was primarily due to increases in business development expenses of $2.4 million and bad debt expense of $0.7 million. Executive Search North America general and administrative expenses, as a percentage of fee revenue, was 5% in fiscal 2022 compared to 7% in fiscal 2021.
Executive Search North America general and administrative expenses increased by $3.9 million, or 14%, to $30.8 million in fiscal 2022 from $26.9 million in fiscal 2021. The increase in general and administrative expenses was primarily due to increases in business development expenses of $2.4 million and bad debt expense of $0.7 million.
RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, was 6% in fiscal 2022 compared to 7% in fiscal 2021. Corporate general and administrative expenses increased by $18.0 million, or 51%, to $53.5 million in fiscal 2022 compared to $35.5 million in fiscal 2021.
Corporate general and administrative expenses increased by $18.0 million, or 51%, to $53.5 million in fiscal 2022 compared to $35.5 million in fiscal 2021.
Treasury and Agency securities are available for general corporate purposes . 41 As of April 30, 2022 and 2021 , marketable securities of $ 2 33 . 0 million and $ 246.4 million, respectively, included equity securities of $ 1 68 . 7 million (net of gross unrealized gains of $ 10 . 7 million and gross unrealized losses of $ 6 . 1 million) and $ 175.6 million (net of gross unrealized gains of $ 3 0 . 0 million and gross unrealized losses of $ 0 . 1 million), respectively, and were held in trust for settlement of our obligations under certain deferred compensation plans, of which $ 1 5 8 . 7 million and $ 1 66 . 5 million, respectively, are classified as non-current.
As of April 30, 2023 and 2022, marketable securities of $223.9 million and $233.0 million, respectively, included equity securities of $187.8 million (net of gross unrealized gains of $9.5 million and gross unrealized losses of $8.7 million) and $168.7 million (net of gross unrealized gains of $10.7 million and gross unrealized losses of $6.1 million), respectively, and were held in trust for settlement of our obligations under certain deferred compensation plans, of which $176.1 million and $158.7 million, respectively, are classified as non-current.
Conversely, the Company recorded a tax benefit for a windfall in connection with stock-based awards that vested in fiscal 2022. 39 Net Income Attributable to Noncontrolling Interest Net income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of income.
Net Income Attributable to Noncontrolling Interest Net income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of income.
On December 8, 2014, the Board of Directors adopted a dividend policy to distribute to our stockholders a regular quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend. On June 21, 2021, the Board of Directors increased the quarterly dividend to $0.12 per share.
The standby letters of credits were generally issued as a result of entering into office premise leases. On December 8, 2014, the Board of Directors adopted a dividend policy to distribute to our stockholders a regular quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend.
The Consulting teams employ an integrated approach across core solutions, 28 each one intended to strengthen our work and thinking in the next, to help clients execute their strategy in a digitally enabled world. 2. Digital delivers scalable tech-enabled solutions designed to identify the best structures, roles, capabilities and behaviors to drive businesses forward.
The Consulting teams employ an integrated approach across core solutions, each one intended to strengthen our work and thinking in the next, to help clients execute their strategy in a digitally enabled world. 28 2. Digital develops technology-enabled Performance Management Tools that empower our clients.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Currency Risk Substantially all our foreign subsidiaries’ operations are measured in their local currencies. Assets and liabilities are translated into U.S. dollars at the rates of exchange in effect at the end of each reporting period and revenue and expenses are translated at daily rates of exchange during the reporting period.
Biggest changeAssets and liabilities are translated into U.S. dollars at the rates of exchange in effect at the end of each reporting period and revenue and expenses are translated at daily rates of exchange during the reporting period. Resulting translation adjustments are reported as a component of accumulated other comprehensive loss, net on our consolidated balance sheets.
The interest rate applicable to loans outstanding under the Amended Credit Agreement may fluctuate between Term Secured Overnight Financing Rate (“SOFR”) plus a SOFR adjustment of 0.10%, plus 1.125% per annum to 2.00% per annum, in the case of SOFR borrowings (or between the alternate base rate plus 0.125% per annum and the alternate base rate plus 1.00% per annum, in the alternative), based upon our total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio”) at such time.
The interest rate applicable to loans outstanding under the Amended Credit Agreement may fluctuate between Term SOFR plus a SOFR adjustment of 0.10%, plus 1.125% per annum to 2.00% per annum, in the case of Term SOFR borrowings (or between the alternate base rate plus 0.125% per annum and the alternate base rate plus 1.00% per annum, in the alternative), based upon our total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio”) at such time.
During fiscal 2022, 2021 and 2020, we recorded foreign currency losses of $1.2 million, $2.7 million and $4.1 million, respectively, in general and administrative expenses in the consolidated statements of income. Our exposure to foreign currency exchange rates is primarily driven by fluctuations involving the following currencies — U.S.
During fiscal 2023, 2022 and 2021, we recorded foreign currency losses of $2.0 million, $1.2 million and $2.7 million, respectively, in general and administrative expenses in the consolidated statements of income. Our exposure to foreign currency exchange rates is primarily driven by fluctuations involving the following currencies — U.S.
We have a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. These foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging 43 instruments pursuant to Accounting Standards Codification 815 , Derivatives and Hedging .
We have a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. These foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to ASC 815, Derivatives and Hedging .
The risk of fluctuations in these variable rates is minimized by the fact that we receive a corresponding adjustment to our borrowed funds crediting rate which has the effect of increasing the CSV on our COLI contracts.
We have sought to minimize the risk of fluctuations in these variable rates by the fact that we receive a corresponding adjustment to our borrowed funds crediting rate, which has the effect of increasing the CSV on our COLI contracts.
Interest Rate Risk O ur exposure to interest rate risk is limited to our Revolver, borrowings against the CSV of COLI contracts and to a lesser extent our fixed income debt securities. As of April 30, 2022 and 2021, there were no amounts outstanding under the Revolver.
Interest Rate Risk Our exposure to interest rate risk is limited to our Credit Facilities, borrowings against the CSV of COLI contracts and to a lesser extent, our fixed income debt securities. As of April 30, 2023, there were no amounts outstanding under the Credit Facilities.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a result of our global operating activities, we are exposed to certain market risks, including foreign currency exchange fluctuations and fluctuations in interest rates. We manage our exposure to these risks in the normal course of our business as described below.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a result of our global operating activities, we are exposed to certain market risks, including foreign currency exchange fluctuations and fluctuations in interest rates.
At our option, loans issued under the Credit Agreement bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin.
At our option, loans issued under the Amended Credit Agreement bear interest at either Term Secured Overnight Financing Rate ("SOFR") or an alternate base rate, in each case plus the applicable interest rate margin.
Resulting translation adjustments are reported as a component of accumulated other comprehensive loss, net on our consolidated balance sheets. Transactions denominated in a currency other than the reporting entity’s functional currency may give rise to foreign currency gains or losses that impact our results of operations. Historically, we have not realized significant foreign currency gains or losses on such transactions.
Transactions denominated in a currency other than the reporting entity’s functional currency may give rise to foreign currency gains or losses that impact our results of operations. Historically, we have not realized significant foreign currency gains or losses on such transactions.
Based on balances exposed to fluctuation in exchange rates between these currencies as of April 30, 2022, a 10% increase or decrease in the value of these currencies could result in a foreign exchange gain or loss of $13.0 million.
Dollar, Canadian Dollar, Pound Sterling, Euro, Swiss Franc, Danish Krone, Polish Zloty, Singapore Dollar, and Mexican Peso. Based on balances exposed to fluctuation in exchange rates between these currencies as of April 30, 2023, a 10% increase or decrease in the value of these currencies could result in a foreign exchange gain or loss of $10.2 million.
During fiscal 2020, the average interest rate on current and previous term loans was 3.34%. We had $79.8 million and $80.0 million of borrowings against the CSV of COLI contracts as of April 30, 2022 and 2021, respectively, bearing interest primarily at variable rates.
We had $77.1 million and $79.8 million of borrowings against the CSV of COLI contracts as of April 30, 2023 and 2022, respectively, bearing interest primarily at variable rates.
Removed
Dollar, Pound Sterling, Euro, Canadian Dollar, Singapore Dollar, Brazilian Real, Mexican Peso, Danish Krone, Swiss Franc, Korean Won and South African Rand.
Added
We manage our exposure to these risks in the normal course of our business as described below. 48 Foreign Currency Risk Substantially all our foreign subsidiaries’ operations are measured in their local currencies.

Other KFY 10-K year-over-year comparisons